April 2018 construction starts pull back

By |  May 23, 2018

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The value of new construction starts in April fell 13 percent to a seasonally adjusted annual rate of $674.3 billion, reports Dodge Data & Analytics. This lowered April’s Dodge Index to 143, down from a revised 165 for March.

According to Dodge Data & Analytics, the loss of momentum in April involved each of the three main construction sections: nonbuilding construction, nonresidential building and residential building.

Nonbuilding construction in April was $159 billion, which was down 22 percent from March, Dodge Data & Analytics reports. The public works categories as a group dropped 25 percent, the miscellaneous public works category, which includes pipelines and mass transit projects, fell 45 percent, and highway and bridge construction fell 12 percent. In addition, the environmental public works categories registered both increases and decreases, with river/harbor development down 26 percent, sewer construction down 9 percent and water supply construction up 2 percent. The electric utility/gas plant category also increased 7 percent.

Nonresidential building in April was $211.5 billion, which was down 12 percent from March. The institutional side of nonresidential building decreased 12 percent in April, with educational facilities dropping 13 percent, healthcare facilities dropping 27 percent and transportation terminal work dropping 16 percent. Despite this, the public buildings category advanced 34 percent, religious buildings rose 26 percent and amusement-related projects increased 3 percent. The manufacturing plant category fell 59 percent, as well.

The commercial building categories as a group rose 5 percent after a 15 percent decline in March. Office construction rebounded 18 percent, store construction grew 21 percent and hotel construction increased 25 percent. In addition, commercial garages fell 37 percent and warehouse construction fell 11 percent.

Residential building in April was down 9 percent at $303.8 billion, with multifamily housing down 20 percent and single-family housing down 4 percent.

“The construction start statistics can be volatile on a monthly basis, and given the wide swings present in March and April it’s probably best to take the average of the two months in assessing the current health of the construction industry,” says Robert Murray, chief economist for Dodge Data & Analytics. “The average for March and April shows that construction starts so far in 2018 are proceeding slightly behind last year’s average pace. Even with this modest slowdown in early 2018, there are several factors in the current environment that should help construction activity to stay close to recent levels.”

According to Dodge Data & Analytics, the 7 percent downturn for total construction starts on an unadjusted basis during the January through April 2018 was due to reduced activity for two of the three main construction sectors. Year-to-date, nonbuilding construction fell 10 percent, nonresidential building fell 18 percent and residential building increased 4 percent.

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