Throughout the long-term history of the starts, there has been a typical drop – due to weather-related factors − of -2.5% between January and February. Harsh conditions in winter can put a halt to field work. February, however, is the last in a string of months during which starts tend to decline period-to-period on account of seasonality. From March through July, the tendency is for starts to pick up from one month to the next.

Starts in February 2017 versus what was an exceptionally strong February 2016 were -9.2%. Year-to-date starts in 2017 compared with January-to-February of last year were -7.5%.

The starts figures throughout this report are not seasonally adjusted (NSA). Nor are they altered for inflation. They are expressed in what are termed ‘current’ as opposed to ‘constant’ dollars.

‘Nonresidential building’ plus ‘engineering/civil’ work accounts for a considerably larger share of total construction than residential activity. The former’s combined proportion of total put-in-place construction in the Census Bureau’s January report was 60%; the latter’s was 40%.

ConstructConnect’s construction starts are leading indicators for the Census Bureau’s capital investment or put-in-place series. Also, the reporting period for starts (i.e., February 2017) is one month ahead of the reporting period for the investment series (i.e., January 2017.)

According to February’s Employment Situation Report from the Bureau of Labor Statistics (BLS), there has been a surge in the number of construction jobs early in 2017. The month-to-month increase so far this year has averaged +48,000, beating the +17,000 for January and February of last year. Year-over-year employment in construction is presently +3.3%, which is a rate of gain more than twice as fast as for all positions in the economy, +1.6%. Most other industrial sectors have not been keeping up to the same degree. Manufacturing employment, for example, has been essentially even, +0.1%. The current NSA unemployment rate for the U.S. construction sector is 8.8%, which is about on a par with the 8.7% level of 12 months ago.

There are two other data series with close ties to construction appearing in Table B-1 of the monthly Employment Situation Report. As a ‘leading’ indicator, – i.e., before there can be field activity, projects must be rendered into working drawings by design professionals − the total number of jobs in architectural and engineering services in February 2017 was +2.3% year over year.  As a ‘coincident’ indicator, total staffing at retail outlets specializing in selling building materials and supplies was +1.7% year over year in 2017’s second month.

February’s small step-back in starts (-1.7%), month-to-month (m/m), originated entirely in the institutional type-of-structure category, -33.2%. Heavy engineering/civil starts were up a modest +4.5% and commercial work charged ahead by a more substantial +18.7%. The smaller-volume-category of industrial, which can display considerable volatility brought on by the presence or absence of a mega project or two, was +65.3%.

As for February 2017 relative to February 2016 (y/y), the prevalence of percentage declines was more widespread. Industrial was -47.3%; institutional -26.4%; and commercial, -13.4%. Engineering alone among the major type-of-structure categories recorded a climb, +26.2%.

With respect to the year-to-date (ytd) – i.e., January-February 2017 versus January-February 2016 − starts decline of -7.5%, industrial (-39.4%), institutional, (-11.7%) and commercial (-7.0%) all recorded slippage, while engineering (+2.9%) managed minor upward movement.

‘Roads/highways’ is the largest subset of engineering starts (i.e., with a 42% share so far in 2017) and its volume in February was -5.9% m/m; +23.7% y/y; and -0.5% ytd. ‘Water/sewage’ work (with a 20% portion) is the second most important civil subcategory. In the latest month, it was down according to all three measures: -12.5% m/m; -2.7% y/y; and -13.8% ytd. ‘Bridge’ starts (at 16% of the total) were -21.5% m/m; but a hefty +52.5% y/y; and +23.7% ytd.

Commercial starts so far this year have received a boost from ‘private office buildings’, which in February were: +106.4% m/m; +94.3% y/y; and +57.4% ytd. A major contributor to this bounty was a large New York office tower. ‘Government office building’ starts moved in the opposite direction: -45.6% m/m; -47.2% y/y; and -27.0% ytd. ‘Hotel/motel’ starts performed well m/m (+9.4%), but were disappointing y/y (-23.8%) and ytd (-36.1%). ‘Warehouse’ starts were uniformly upbeat: +77.6% m/m; +59.6% y/y; and +21.7% ytd.

Institutional starts continued to be dominated by ‘schools/colleges’ (56% of the category’s total) and ‘hospitals/clinics’ (a 15% slice). Neither has done well so far in 2017. The former in February was -43.6% m/m; -30.3% y/y; and -7.1% ytd. The latter was worse; -52.3% m/m; -56.4% y/y; and -35.7% ytd.

Table 2 on of this report reorders and provides more detail on some of the type-of-structure categories in Table 1. The reasons for this ‘second view’ are set out in the footnote.

Among the 12-month moving average trend-line graphs, the flattening in the engineering/civil curve has resulted from a significant jog upwards for bridges that has been counterbalanced by a steeply descending slope for ‘miscellaneous civil’ (e.g., power and oil and gas work), while ‘roads/highways’ and ‘water/sewage’ have stayed on level planes of late. In nonresidential building, both commercial and institutional have backed off a little from their peaks, with ‘retail’ among the subsets showing the most apparent inclination to retreat.

There are preliminary indications that on the cusp of spring, earnings are beginning to blossom. Table B-3 of the latest Employment Situation Report records that construction workers, including bosses, had year-over-year average hourly (+2.7%) and average weekly (+2.4%) earnings in February that were quite close to what all employees in the labor force were receiving (+2.8% and +2.5% respectively).

Nonmanager construction workers, however, did notably better. Whereas for all nonsupervisory employees throughout the economy, both average hourly and average weekly earnings were +2.5%, the comparable gains for those wearing ‘hard hats’ were +3.4% and +3.6%.

The value of construction starts each month is summarized from ConstructConnect’s database of all active construction projects in the U.S. Missing project values are estimated with the help of RSMeans’ building cost models.

ConstructConnect’s nonresidential construction starts series, because it is comprised of total-value estimates for individual projects, some of which are ultra-large, has a history of being more volatile than many other leading indicators for the economy.

TABLE 1: VALUE OF UNITED STATES
CONSTRUCTION STARTS
– FEBRUARY 2017
YEAR TO DATE
(CONSTRUCTCONNECT) (See on ConstructConnect)