Construction starts drop in August 2018

By |  October 1, 2018
August 2018 construction starts

Chart courtesy of Dodge Data & Analytics

At a seasonally-adjusted annual rate of $741.9 billion, the value of new construction starts in August declined by 9 percent from the previous month, according to Dodge Data & Analytics. The August data produced a reading of 157 for the Dodge Index (2000=100), down from 173 in July. During the previous seven months, the Dodge Index averaged 170, with this year’s high of 190 reached in June and this year’s low of 152 taking place in April.

The downturn of 9 percent for August equals the same decline for July, a stark contrast to increases of 14 and 10 percent in May and June, respectively.

In August, there was less activity in the nonresidential building sector, down 19 percent, while residential building was also down 7 percent. Despite this, there was a 7 percent increase in the nonbuilding construction sector in August.

Total construction starts, on an unadjusted basis, in the first eight months of 2018 were up 1 percent from one year ago at $540 billion.

The year-to-date performance for total construction was restrained by a 45 percent drop in the electric utility/gas plant category. Excluding the electric utility/gas plant category, total construction starts for the first eight months of this year would be up 4 percent compared with the same time period one year ago.

“The pace of construction starts weakened substantially in August, but remained within the range of activity witnessed so far in 2018, admittedly at the low end,” says Robert Murray, chief economist for Dodge Data & Analytics. “For nonresidential building, the boost coming from very large projects in August was not as strong as what took place in late spring, even with the August start of such projects as a $520 million office building in Sacramento, California, and a $500 million hospital expansion in Cincinnati. Accordingly, it would be too early to say that nonresidential building has already peaked and is now retreating, given the volatility that arises in the monthly data from the presence or absence of very large projects.”

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