October 2017 construction starts retreat 9 percent

By |  November 21, 2017

New construction starts in October dropped 9 percent to a seasonally adjusted annual rate of $742.9 billion, reports Dodge Data & Analytics.

October’s data also lowered the Dodge Index to 157, compared with a revised 173 for September, which was the highest reading so far in 2017.

Nonresidential building in October was $258.7 billion, down 30 percent from September. The manufacturing building category dropped 67 percent; the institutional categories as a group fell 36 percent; transportation terminal work fell 82 percent; and the educational facilities category dropped 29 percent.

In addition, healthcare facilities fell 21 percent in October, and the amusement and recreational category rose 121 percent.

October also saw a 20 percent gain in religious buildings and a 15 percent gain in public buildings, including courthouses and detention facilities.

The commercial categories as a group advanced 10 percent in October. In this category, office buildings fell 14 percent, store construction advanced 34 percent, warehouse construction improved 27 percent and hotel construction increased 32 percent.

Residential building in October fell 1 percent to $295.9 billion. Multifamily housing dropped 3 percent and single-family housing held steady. In October, the top five metropolitan markets ranked by dollar amount of multifamily starts include New York, Miami, Washington D.C., Seattle and Los Angeles.

Nonbuilding construction in October rose 27 percent to $188.2 billion. The public works categories as a group rose 51 percent, river/harbor development improved 35 percent and water supply construction advanced 21 percent. Despite this, the electric power and gas plant category in October dropped 55 percent.

“The construction start statistics have occasionally been subject to ‘spikes’ on a monthly basis, boosted by the presence of several unusually large projects, and September definitely qualified as one of those ‘spikes,’” says Robert Murray, chief economist for Dodge Data & Analytics. “The pace for nonresidential building in September was unsustainably high, so October’s decline was expected.

“Nonresidential building is still on track to show moderate growth for 2017 as a whole, helping to keep the expansion for overall construction activity going. On the residential side, multifamily housing is retreating from a very strong 2016, but to this point the retreat has been modest. And, the downward pull coming from nonbuilding construction appears to be easing, given the ongoing strength shown by pipeline projects and some recent improvement by highways, bridges and mass transit.”

For the first 10 months of 2017, total construction starts on an unadjusted basis were $631.2 billion, up 1 percent from the same time period as one year ago. According to Dodge Data & Analytics, the 1 percent increase was due to mixed behavior by the three major construction sectors. For the first 10 months of 2017, nonresidential building increased 8 percent, residential building grew 1 percent and nonbuilding construction fell 7 percent.

Allison Kral

About the Author:

Allison Kral is the former senior digital media manager for North Coast Media (NCM). She completed her undergraduate degree at Ohio University where she received a Bachelor of Science in magazine journalism from the E.W. Scripps School of Journalism. She works across a number of digital platforms, which include creating e-newsletters, writing articles and posting across social media sites. She also creates content for NCM's Portable Plants magazine, GPS World magazine and Geospatial Solutions. Her understanding of the ever-changing digital media world allows her to quickly grasp what a target audience desires and create content that is appealing and relevant for any client across any platform.

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