Nonresidential, nonbuilding construction down

New construction starts in November fell 11 percent from the previous month, according to McGraw Hill Construction. The downturn followed heightened activity in October, which, according to the firm, showed the strongest pace for construction starts during 2013.

Both nonresidential building and nonbuilding construction pulled back from their elevated October amounts. At the same time, residential building showed modest growth in November, continuing the steady upward trend that’s been present most of this year. For the first 11 months of 2013, total construction starts on an unadjusted basis came in at $475.3 billion – up 6 percent from the same period a year ago.

McGraw Hill Construction adds that November’s data produced a reading of 111 for the Dodge Index, compared with 125 in October and 118 in September. For the first eight months of 2013, the Dodge Index had averaged 105 as it hovered within the fairly narrow range of 100 to 108.

While November showed a decline from the previous two months, the level of activity was still above what had been reported earlier in the year, McGraw Hill Construction says.

“The monthly construction start statistics will often show an up-and-down pattern, given the amount of large projects that are included in any given month,” says Robert Murray, chief economist for McGraw Hill Construction. “Although November witnessed a decline from the heightened activity in September and October, the construction start statistics, when viewed in the context of 2013 as a whole, are still trending upward.

“Housing during 2013 has strengthened on a consistent basis,” Murray continues. “Nonresidential building is gaining momentum, aided by improving activity for commercial building from low levels while the institutional building sector stabilizes after a lengthy decline. Nonbuilding construction is weakening due to a sharply reduced amount of new electric utility starts, but its public works component has shown surprising resilience this year.”

For 2014, Murray says the upward trend for total construction starts is expected to continue. One plus for construction and the economy going forward is the recent budget pact approved by the U.S. Congress, he says, because it removes the uncertainty that would have come with the threat of another government shutdown in early 2014.