New construction starts increased 9% in June to a seasonally adjusted annual rate of $529.5 billion, according to McGraw-Hill Construction Dodge, a division of The McGraw-Hill Cos. Nonresidential building posted a healthy gain, while nonbuilding construction (public works and electric utilities) surged upward after a weak May. In the months immediately preceding June, both the nonresidential and nonbuilding sectors had experienced generally subdued contracting. Residential building in June showed more modest improvement, edging up from its elevated May pace. During the first six months of 2003, total construction on an unadjusted basis was reported at $252.8 billion, down 2% from the same period a year ago.
The brisk pace of June construction starts lifted the Dodge Index to 159, up from a revised 147 in May. The Dodge Index began the year at 152, and then settled back to the range of 145 to 147 over the next four months. June's reading was the highest in over a year, when the Dodge Index reached 161 in February 2002.
"The sharp growth in June reflected some 'catching-up' by nonresidential building and public works, as well as the boost coming from the start of three very large power plants," said Robert Murray, vice president of economic affairs for McGraw-Hill Construction Dodge.
Nonbuilding construction in June soared 29% to $106.8 billion. Public works had a generally strong June, including a 35% gain for highways. The highway category has been generally weaker during 2003, but fiscal 2003 appropriations passed in February are finally helping road projects reach the construction start stage. Bridges, down 1% showed reduced contracting.
