AGC: Starts rebounded in May but slid year-to-date, Reed says; Beige Book is mostly gray
The value of nonresidential construction starts jumped 16 percent in May (not seasonally adjusted) but was down 6.2 percent for the first five months of 2009 compared to the same period in 2008, Reed Construction Data reported on Thursday [June 11], based on its own compilation of starts. Chief Economist Jim Haughey commented, "However, May starts were 20 percent below last December. The volume decline is greater than 20 percent because bid prices have inched lower and May is typically a seasonally stronger month than December. The May starts increase partly offsets an unusually weak April and does not signal that starts have moved to a rising trend. That is still many months away, near yearend. Expect a mix of monthly gains and losses for the balance of the year, with the average level of starts not significantly different from May. Credit problems promise more delays and cancellations for commercial buildings and strained budget balances promise cutbacks in public building construction later this year. Highway, bridge and water/sewer starts will be boosted as more stimulus contract work begins. …The economic stimulus plan has directly funded a little more than 1 percent of the estimated $275 billion spent on construction, excluding housing, in 2009 through May. This includes: (1) the $1.5 billion reimbursed to states through early June for highway projects; (2) smaller federal reimbursements for other construction work; and (3) an allowance for construction work completed that has not yet been reimbursed," according to a June 12 Data DIGest report.