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Seasonally adjusted new construction starts in May dropped 6% from April’s level, McGraw-Hill Construction (MHC) reported on Thursday, based on data it collected. “Nonresidential building pulled back after its improved level in March and April, while residential building stayed weak. The nonbuilding construction sector showed moderate growth in May, as a strong gain for electric utilities offset a loss of momentum for public works. During the first five months of 2011, total construction starts on an unadjusted basis [was] down 9% from the same period a year ago….Nonresidential building in the January-May period of 2011 fell 8%, due to a 21% slide for the institutional categories. At the same time, commercial building grew 9% year-to-date while manufacturing building climbed 156%. Residential building in the January-May period of 2011 dropped 13%, with the comparison to the early months of 2010 when single-family housing was still being lifted by the homebuyer tax credits. Because single-family housing lost momentum at mid-2010, it’s expected that the 2011 year-to-date performance for single-family housing will become less negative as this year proceeds. Nonbuilding construction in the January-May period of 2011 slipped 7%, the result of a 25% reduction for public works combined with a 105% increase for electric utilities.” The outlook for nonresidential construction is “turning more pessimistic, as proposed new projects are being postponed or canceled—primarily on fears that, with the economy sputtering, this might not be the best time to take on more debt,” reported on June 10. “The construction market went from bad to worse in May. And heavy competition for the few projects that are out there are keeping construction costs contained at lows—despite ubiquitous price increases for building materials that contractors are mostly eating. There are lingering bright spots: apartment construction (we’ve become a nation of renters), data centers (thanks to the likes of Facebook and Google), and healthcare (kind of a mystery in light of hospital closures).” “Total construction in 2011 will climb 2% after declining 9% in 2010,” consulting firm FMI stated in its second-quarter on June 10. “The nonresidential sector will decline just 2% in 2011 after a 19% decline in 2010. Most of the areas showing growth, excluding residential, are in markets related to infrastructure. Sewage and waste disposal, and conservation and development construction will contribute to a positive climb in the nonbuilding segment. Power will continue to be a growing construction market (2% growth for 2011) as there is no sign that our need for more of it will abate. We expect growth to accelerate over the next five years as more attention is paid to renewable energy sources.” The Architecture Billings Index, a measure of the number of architecture firms whose billings increased from the month before minus the number whose billings dropped, slipped to 47.2, seasonally adjusted, in May from 47.6 in April, which “reflects a continued decrease in demand for design services (any score above 50 indicates an increase in billings),” the American Institute of Architects (AIA) reported on Wednesday. “The new projects inquiry index was 52.6, down from a mark of 55.0 in April, its lowest level in almost a year and a half. ‘Whatever positive momentum that there had been seen in late 2010 and earlier this year has disappeared,’ said AIA Chief Economist Kermit Baker. ‘The broader economy looks to be entering another soft spot, and certainly state budget constraints are adversely affecting the profession’s ability to work on institutional projects. But there is no denying that the prolonged credit freeze from lenders for financing commercial projects is the number one challenge to a recovery for the design and construction industry.’” Practice specialty sub-indexes, presented as three-month moving averages, were positive on net for multifamily residential (53.6) but not other types: mixed practice, 49.1; commercial/industrial, 46.5; and institutional, 44.9. The index foreshadows demand for construction but the lead time varies. The number of mass layoff events in May—involving 50 or more employees from a single employer—“was about the same (1,354 events) as recorded in May 2010, while associated initial claims” for unemployment insurance decreased 3%, the Bureau of Labor Statistics reported on Wednesday. “Fourteen of the 19 major industry sectors in the private economy reported over-the-year declines in initial claims, with the largest decreases occurring in construction, retail trade, and professional and technical services.” Mass layoff events in construction totaled 137 (down 14% since May 2010), involving 9,875 claimants (down 19%). “State personal income growth accelerated to 1.8% in the first quarter of 2011, from 0.8% in the fourth quarter of 2010,” the Bureau of Economic Analysis reported on Wednesday. Personal income increased in all states, with growth ranging from 0.7% in Iowa to 6.9% in North Dakota. Total earnings (wage and salary disbursements, or payrolls; supplements to wages and salaries; and proprietors’ income) increased 1.0% overall during the quarter but construction earnings were unchanged nationally. Construction earnings climbed in 19 states plus the District of Columbia, led by an increase of 2.2% in Texas, 1.5% in California, 1.3% in Virginia, and 1.1% each in Mississippi and Wyoming. Construction earnings declined in 31 states. The largest drop was in New Mexico, -4.0%; followed by South Dakota, -3.7%; Wisconsin, -2.3%; Kansas, -2.1%; New York and Colorado, -1.9% each.