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Construction Starts Advance
Nonresidential Building Increases 13 Percent


In the residential building sector, single-family housing slipped 4 percent in June, but was still 3 percent above 2016's average monthly amount.

According to Dodge Data & Analytics, total new construction starts in June grew 4 percent from the previous month led by a big jump in nonresidential building after two flat months.

Besides the 13 percent gain in that sector, the non-building construction sector rose 8 percent on the back of higher activity for electric utilities. However, residential building dipped 4 percent, with a down month for both single family and multifamily components.

Now halfway through the year, total starts on an unadjusted basis are off 4 percent from the same period a year ago, but up 1 percent if the manufacturing plant and electric/utility gas plant categories are excluded.

The Dodge Index for June sits at 144 compared to 138 for May. This put the second quarter average at 139, down 10 percent from the first quarter's 154 average. In the past year, total starts have been on a roller coaster on a quarterly basis, including being down 6 percent in the fourth quarter of 2016, followed by a climb of 7 percent in this year's first quarter and now the 10 percent drop.

"A maturing construction expansion is characterized by deceleration in the overall rate of growth, that's often accompanied by up-and-down behavior on a quarterly or monthly basis," stated Robert A. Murray, chief economist for Dodge Data & Analytics. "The 11 percent to 12 percent yearly increases for total construction starts during the 2012-2015 period were followed by a 4 percent gain in 2016, and several factors suggest that 2017 should still see modest growth for the year as a whole. These factors include commercial vacancy rates that remain low as well as greater construction funding coming from the state and local bond measures passed in recent years. At the same time, it's become apparent that any impact from a new federal infrastructure program, should one get passed during the latter half of 2017, would benefit construction more in 2018 and 2019."

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July 21, 2019, 1:13 pm PDT

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