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Nonresidential starts drive building gains

Keywords: Tags  construction starts, nonresidential consrtruction, McGraw Hill Financial, McGraw Hill Construction, Robert Murray, Frank Haflich

LOS ANGELES — The value of U.S. construction starts rose 6.3 percent in June, spurred by an 11.8-percent jump in the nonresidential building sector that was paced by manufacturing projects.

Construction starts totaled a seasonally adjusted $549.7 billion for the month, up from nearly $517.4 billion the previous month, according to McGraw Hill Construction, a division of New York-based McGraw Hill Financial. Construction starts had declined 4.9 percent in May (, June 23).

The June increase in nonresidential construction was based primarily on an "exceptional volume" of manufacturing projects, according to McGraw Hill. While the annualized value of nonresidential building rose to $214.9 billion in June from $192.3 billion in May, residential construction was up about 3.3 percent to $214.3 billion and nonbuilding construction—including public works and electric utilities—increased 2.4 percent to $120.5 billion.

For the first six months of the year, construction starts were valued at an unadjusted $254.1 billion, up 1 percent from the first half of 2013. This was led by a 9.2-percent increase in nonresidential building that helped offset a 13.6-percent drop in nonbuilding construction.

The minimal gain in first-half construction starts reflects "lackluster activity present in January and February," presumably due to severe weather, Robert A. Murray, chief economist for McGraw Hill Construction, said. More recent data suggests total construction "is getting back on track in a moderate, if selective, manner."

Multifamily housing continues to proceed "at a healthy clip," while commercial building is also moving up "hesitantly," he said.

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