Construction takes a hit in January

By |  February 21, 2014

The value of new construction starts fell 13 percent in January to a seasonally adjusted annual rate of $485.0 billion, according to McGraw Hill Construction, a division of McGraw Hill Financial. The downturn followed a healthy performance in December, which was the third-highest month for total construction starts during 2013, the firm says.

According to McGraw Hill Construction, January’s retreat encompassed all three main construction sectors, with moderate declines reported for nonresidential building and housing, as well as a more substantial loss of momentum for nonbuilding construction after a robust December.

On an unadjusted basis, total construction starts in January came in at $34.1 billion – down 5 percent from the same month a year ago.

The January statistics lowered the Dodge Index to 103, compared with a revised 118 for December and below the average index reading of 110 for all of 2013.

“The year 2014 began slowly, due to behavior specific to each of the three main construction sectors,” says Robert Murray, chief economist for McGraw Hill Construction. “Nonresidential building in 2013 advanced 7 percent, but the progress was occasionally hesitant, including sluggish activity at the end of last year that carried over into January.

“At the same time, the prospects for continued growth for nonresidential building during 2014 are generally positive, helped by receding vacancies for commercial properties and some improvement in the fiscal health of state governments. Residential building in 2013 climbed 24 percent, but toward the end of last year growth began to decelerate as mortgage lending to first-time homebuyers remained stringent.”

According to Murray, the January slowdown for housing was due in part to tough winter weather conditions.

“Nonbuilding construction in 2013 dropped 12 percent,” Murray adds, “as the steep pullback by electric utilities outweighed surprising growth for public works. Last year’s nonbuilding performance was also quite volatile on a month-to-month basis, including strong activity in December that’s now been followed by a sharp reduction in January.”

Comments are closed