Drop in Public Works following a strong July breaks the three-month string of Total Construction Gains
NEW YORK--(BUSINESS WIRE)--New construction starts dropped 6% over the month in August to a seasonally adjusted annual rate of $807.1 billion, according to Dodge Data & Analytics. August’s decline breaks a string of three consecutive month-to-month gains. By major sector, nonbuilding construction fell 15% in August, reversing the large increases made in the previous month when several notable projects started. The declines in residential and nonresidential building were milder – falling 1% and 3% respectively in August.
The August statistics lowered the Dodge Index to 171 (2000=100) compared to 182 in July, marking the lowest reading for the Index since May. Despite the month’s decline, the Index remains above its 2019 average of 167.
Year-to-date through eight months, total construction starts were 5% lower than the same period a year ago due to declines in residential and nonresidential buildings. Nonbuilding construction activity was 3% higher through the first eight months of the year due to gains in electric utilities/gas plants.
“The August decline was expected after July’s robust level of starts,” stated Richard Branch, Chief Economist for Dodge Data & Analytics. “Furthermore, the year-to-date activity continued to suggest that this year’s levels are easing back from what was seen in 2018 – essentially mirroring the slowdown in overall economic growth.”
Nonbuilding construction starts reached $217.4 billion (at a seasonally adjusted annual rate) in August, a 15% decline from the previous month. Environmental public works (drinking water, sewers, hazardous waste, and other water resource projects) fell 43% from July to August, while miscellaneous nonbuilding fell 32%. Both types of construction had shown remarkable strength in July as work on several large projects got underway. Offsetting these declines was a 10% increase in street and bridge projects. The electric utility/gas plant category also gained 9% over the month.
The largest nonbuilding construction project to start work in August was the $2 billion Permian Highway Pipeline Project in Texas. Also breaking ground during the month was the $840 million Lynwood Link Extension rail line in Washington and the $625 million Palen Solar Farm in Desert Center CA.
Through the first eight months of 2019, nonbuilding construction was 3% higher than 2018. However, environmental public works and electric utility/gas plants were the only categories within nonbuilding construction registering a positive year-to-date gain.
Nonresidential building starts dropped 3% from July to August, to $283.9 billion (at a seasonally adjusted annual rate). August’s decline was the direct result of a 66% drop in manufacturing starts, which had soared in July when the $1.0 billion Foxconn manufacturing complex broke ground in Mount Pleasant WI. Commercial construction starts rose 7% in August to $135.2 billion (annual), the result of increases in offices and warehouses. Institutional starts rose 2% in August to $138.2 billion (annual) due to increases in health and education facilities.
Several notable nonresidential projects got underway in August, including the $450 million Joan Paul Rubschlager University Cancer Care Center in Chicago IL and two Facebook data centers — a $400 million facility in Altoona IA and a $350 million building in New Albany OH.
Through the first eight months of 2019, nonresidential building starts totaled $188.2 billion, a decline of 7% over the same time frame of 2018. Commercial starts were 3% higher year-to-date, fueled by gains in offices, warehouses, and parking structures. Starts for stores and hotels were lower through the first eight months of this year. Institutional construction was 5% lower year-to-date at $92 billion with declines evident across all institutional categories. Manufacturing construction starts were 46% lower year-to-date.
Residential building fell 1% during the month to $305.8 billion. Single family construction was 3% lower, overwhelming a 3% gain in multifamily starts.
The month-to-month growth in multifamily housing was aided by the start of a $600 million apartment complex on West 29th Street in New York, NY. Also breaking ground during the month was the $515 million Brookfield residential tower in Los Angeles, CA and the $223 million Sendero Verde mixed-use project in New York, NY.
On a year-to-date basis, total residential construction was 8% lower than during the first eight months of 2018 at $211.3 billion. Single family construction was 6% down, while multifamily declined 13% through eight months.
: Dodge Data & Analytics is North America’s leading provider of commercial construction project data, market forecasting & analytics services and workflow integration solutions for the construction industry. Building product manufacturers, architects, engineers, contractors, and service providers leverage Dodge to identify and pursue unseen growth opportunities that help them grow their business. On a local, regional or national level, Dodge empowers its customers to better understand their markets, uncover key relationships, size growth opportunities, and pursue specific sales opportunities with success. The company’s construction project information is the most comprehensive and verified in the industry. Dodge is leveraging its more than 125-year-old legacy of continuous innovation to help the industry meet the building challenges of the future. Learn more at www.construction.com.
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