Bedford, MA - July 17, 2008 - New construction starts in June retreated 1% to a seasonally adjusted annual rate of $552.0 billion, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. Nonresidential building fell 12% after its elevated May pace, pulling down the volume of total construction. Meanwhile, residential building registered a modest 2% gain in June, and a more substantial 19% increase was reported for nonbuilding construction. During the first six months of 2008, total construction on an unadjusted basis came in at $282.1 billion, down 16% from a year ago. If residential building is excluded, new construction starts in the first six months of 2008 were up 3%. Table for Monthly Summary of Construction Value.

The June statistics produced a 117 reading for the Dodge Index (2000=100), compared to May's 118. "The pattern of activity during the first half of 2008 featured wide swings month-to-month for nonresidential building and nonbuilding construction, often due to the impact of unusually large projects," stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. "In May nonresidential building was the beneficiary of several huge projects that reached groundbreaking, while in June this was the case for nonbuilding construction. In contrast to such up-and-down behavior, residential building during the first half of 2008 was consistently depressed, and despite June's slight upturn it's expected that homebuilding will see continued weakness in coming months."

Nonresidential building in June was $233.2 billion (annual rate), a 12% decline that followed a 32% jump in May. Much of May's strength came from the start of a massive $3.8 billion oil refinery expansion in Indiana. June also included the start of a major refinery project, a $1.9 billion refinery addition in Michigan, which though considerable in scope was smaller than the entry for May. Reflecting the impact of these two refinery projects, the manufacturing plant category in June fell 43%. If these two refinery projects are excluded from the May and June statistics, the manufacturing plant category in June would be down 23% and nonresidential building would be down 4%. The June retreat for manufacturing plants was made somewhat less severe by the start of a $250 million steel mill in Alabama. The commercial categories showed a mixed performance in June. Store construction revealed a further loss of momentum, slipping 3%, and a similar 2% decline was reported for warehouses. On the plus side, hotel construction jumped 35% in June, boosted by groundbreaking for a $270 million hotel in Uncasville CT and a $226 million convention center hotel in Indianapolis IN. Office construction also witnessed expansion in June, rising 4% with the help of a $140 million office project in Washington DC.

The institutional categories in June showed a 33% pullback for healthcare facilities, following the heightened activity in the previous two months. Amusement-related construction in June dropped 31%, compared to a May that included the start of a $275 million convention center expansion in Indianapolis IN. The educational building category showed more growth in June, climbing 8% with the push coming from the start of several large high school projects, including a $186 million high school in Newton MA. Other institutional categories with June increases were public buildings, up 6%; dormitories, up 10%; churches, up 20%; and transportation terminals, up 33%.

During the first half of 2008, nonresidential building registered a 6% gain compared to last year. The manufacturing plant category surged 132%, lifted by the large refinery projects in May ($3.8 billion) and June ($1.9 billion), plus a $7.0 billion refinery expansion in Texas reported as a January start. Hotel construction advanced 37% during the first half of 2008, aided by the start of three very large hotel/casino projects at the outset of 2008, located in Las Vegas NV and Atlantic City NJ. Office construction during the first half of 2008 was steady in dollar volume, and included groundbreaking for World Trade Center Towers 2, 3, and 4 in New York NY, each valued in excess of $1 billion. Showing the impact of the difficult economic climate were stores and warehouses, with year-to-date declines of 25% and 32%, respectively. The institutional categories in the first half of 2008 included dollar volume gains for educational buildings, up 2%; amusement-related construction, up 3%; healthcare facilities, up 4%; public buildings, up 23%; and dormitories, up 30%. Reduced activity for the January-June period was reported for transportation terminals, down 7%; and churches, down 16%.

Residential building, at $179.0 billion (annual rate), rose 2% in June as the result of moderate improvement for multifamily housing. Helped by start of three large projects in New York NY (valued at $150 million, $116 million, and $100 million, respectively), plus the start of a $139 million residential complex in Salt Lake City UT, multifamily housing in June climbed 11%. However, single family housing slipped an additional 1%, as the lengthy correction for homebuilding remains very much in progress.

For the first half of 2008, residential building was down 39% from the same period a year ago. Single family housing during this time fell 38%, reflecting the following regional performance - the West, down 48%; the South Atlantic, down 40%; the Midwest, down 38%; the South Central, down 30%; and the Northeast, down 22%. Particularly large dollar volume declines for single family housing were reported by these states - Nevada, down 59%; Utah, down 59%; California, down 52%; Georgia, down 51%; and Arizona, down 49%. Florida, which showed the steepest reduction for single family housing of any state in 2007 (down 49%), reported a 43% dollar volume decline for the first half of 2008. Multifamily housing in the January-June period was down 41% in dollar volume, as the amount of large-scale multifamily projects (mostly condominiums) that reached groundbreaking has fallen substantially. The construction start statistics indicate that during the first half of 2008 there were 12 multifamily projects valued at $100 million or more, compared to 21 such projects during the first half of 2007.

Nonbuilding construction in June was $139.9 billion (annual rate), a 19% rise that reflected greater activity for power plants, pipelines, and sewers. After May's weak amount, the electric power category soared 336% in June, boosted by the start of a $500 million wind farm in Montana, plus two large power plants in Pennsylvania - a $475 million gas-fired plant and a $425 million coal-fired plant. The "miscellaneous" public works category, which includes pipeline work, jumped 50% in June with much of the lift coming from an $820 million expansion to a natural gas pipeline located in Arkansas and Mississippi. The sewer category advanced 40% in June, aided by the $448 million upgrade to a water pollution control plant in New York NY. The other environmental project types witnessed reduced contracting in June, with water supply systems down 32% and river/harbor development down 31%. Declines were also reported in June for highways, down 16%; and bridges, down 5%.

For the first six months of 2008, nonbuilding construction came in 3% below the same period a year ago. Highway construction retreated 7%, while the bridge category was down 18% from the first half of 2007 that included $1.4 billion for the start of work on the suspension span of the San Francisco-Oakland Bay Bridge. The year-to-date statistics also showed decreased activity for sewers, down 9%; and miscellaneous public works, down 13%. On the plus side for public works, growth was reported for river/harbor development, up 1%; and water supply systems, up 15%. The electric power category grew 26% in this year's first six months, and renewed expansion for full year 2008 now appears likely after the moderate retreat experienced in 2007.

For total construction, the 16% drop reported for the U.S. in the first half of 2008 reflected double-digit declines in three regions - the South Atlantic, down 28%; the West, down 26%; and the Midwest, down 11%. The South Central was down a more moderate 4% year-to-date, while the Northeast stood apart from the other regions by advancing 5%.