By |  January 24, 2014

New construction starts in December grew 5 percent to a seasonally adjusted annual rate of $554.5 billion, according to McGraw Hill Construction, a division of McGraw Hill Financial. Although both nonresidential building and housing settled back during the final month of 2013, McGraw Hill Construction says the nonbuilding construction sector finished the year strong.

For 2013 as a whole, total construction starts advanced 6 percent to $516.8 billion. This follows a 10 percent gain reported for 2012 and modest 2 percent gains in both 2010 and 2011.

The December stats produced a reading of 117 for the Dodge Index compared to 111 in November. This marked the third-highest month for the Dodge Index during 2013, after September’s 118 and October’s 125. During the first eight months of the year, the Dodge Index hovered within the fairly narrow range of 100 to 108, but it showed a stronger pace of activity during the final four months, reflecting in part the impact of several very large projects.

“The construction industry in 2013 made progress toward establishing a more broad-based recovery, after several years in which the upturn was more limited in scope,” says Robert Murray, chief economist for McGraw Hill Construction. “Housing continued to lead the way, strengthening throughout much of 2013, and it was joined by a faster pace for commercial building, albeit from low levels.

“The institutional building sector registered a considerably smaller decline than in prior years, as its lengthy downturn appears to be ending,” Murray continues. “The public works sector in 2013 showed surprising strength, helped by the start of several major projects – even amid restrained government spending. Running counter in 2013 was a steep drop for new electric utility starts, after the robust amount reported in 2012.

For 2014, Murray says the prospects look good for total construction, with growth anticipated for housing and commercial building. He expects the institutional building sector to at least stabilize.

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