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Construction Starts See Big Monthly Drop
Nonresidential and Nonbuilding Categories Perform Poorly

Construction Starts See Big Monthly Drop

Following a 16% boost in March, new starts slid back 15% in April.

The value of new construction starts in April was down 15% month-to-month thanks to an 18% decrease in nonresidential building and a 31% dive in nonbuilding construction, which includes public works and electric utilities/gas plants. Residential building added a 1% decline but multifamily housing actually saw a slight gain.

For the first four months of the year, the drop-off is 8% in total construction starts from the same period in 2018. However on a year-to-year basis, the numbers for the 12 months ending in April of 2019 held steady with the numbers for the 12 months ending April of last year.

"The construction start statistics can be volatile on a month-to-month basis, and that's certainly been true in March and April," states Robert A. Murray, chief economist for Dodge Data & Analytics. "The public works side of nonbuilding construction got off to a slow start in 2019, which at least through March was partially offset by an upturn for electric utilities/gas plants. Some improvement for public works is expected as the current year proceeds, given the fiscal 2019 federal funding approved back in February as well as the continued support of state construction bond measures."

Murray adds, "Nonresidential building is staying close to its pace of last year, helped by continued strength for office buildings, hotels, educational facilities, and transportation terminals."

In nonresidential construction overall spending, an Associated Builders and Contractors analysis of U.S. Census Bureau data, reports a slight 0.3% uptick in April, which is 6.4% better than the same time last year. Public nonresidential spending expanded 4.8% on a monthly basis and increased 15.4% since April 2018, but private nonresidential spending fell 2.9% in April and is up just 0.6 % year-over-year.

Among the 16 nonresidential construction spending categories, nine experienced a monthly increase; the largest of which were water supply (9.8%), highway and street (6.8%) and transportation (3.9%). Manufacturing (-7.1%) and commercial (-3.7%) posted the largest monthly reductions, though construction spending in the manufacturing category is still up 10.9% over the same time last year.

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September 21, 2019, 11:28 am PDT

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