Construction starts drop in December 2019

Chart courtesy of Dodge Data & Analytics | Click to enlarge

Total construction starts fell 21 percent in December 2019 from the previous month to a seasonally-adjusted annual rate of $800.4 billion, according to Dodge Data & Analytics.

By major sector, nonbuilding starts declined 41 percent in December, nonresidential building starts fell 20 percent and residential starts retreated 4 percent over the month. The December decline dropped the Dodge Index to 169, compared to 213 in November, just below the 12-month average of 174.

The precipitous drop from November to December was based on the noteworthy gains in November’s utility and manufacturing sectors. Therefore, on the plus side, total construction starts only fell 3 percent month-to-month when removing the utility and manufacturing sectors, according to Dodge.

“(2019) will go down as one of the most volatile years for monthly construction starts due to the lumpy nature of large projects,” says Richard Branch, chief economist at Dodge Data & Analytics. “Looking beyond the influence of these massive projects, it is evident that the uncertainty surrounding trade policy weighed on construction activity last year.”

Nonbuilding

Nonbuilding construction fell 41 percent in December to a seasonally-adjusted annual rate of $171.4 billion. The only category to improve in December was environmental public works, which increased 1 percent.

As for other categories, starts of electric utility/gas plants dropped 76 percent, highway and bridge starts declined 18 percent, and miscellaneous nonbuilding starts fell 17 percent over the month.

The largest nonbuilding construction project to break ground in December was the $900 million Sagamore Wind Farm project in Roosevelt County, New Mexico. Other notable projects to break ground in December were the $400 million Deuel Harvest Wind Farm in Clear Lake, South Dakota, and a $400 million extension of US 401 to I-40 in Raleigh, North Carolina.

For the full year of 2019, nonbuilding construction starts improved 7 percent, largely due to a 112 percent jump in the electric utility/gas plant category. Excluding that category, nonbuilding starts were down 8 percent in 2019.

Environmental public works saw an uptick of 4 percent for the full year while miscellaneous nonbuilding fell 19 percent and highway and bridge starts dropped 8 percent.

Nonresidential

Nonresidential building retreated 20 percent from November to December to a seasonally-adjusted annual rate of $289.5 billion. According to Dodge, the largest factor in the decline was a 93 percent drop in manufacturing after a large petrochemical plant broke ground in November.

Still, institutional starts improved 6 percent over the month due to gains in healthcare and recreation, and commercial starts increased 5 percent due to gains in warehouses and parking structures.

The largest nonresidential building project to break ground in December was the $712 million National Geospatial Agency headquarters in St. Louis. Also breaking ground in December was a $570 million medical center renovation in Bethesda, Maryland, and a $400 million consolidated rental car facility at Newark International Airport.

For the full year, nonresidential starts dropped a modest 1 percent, commercial building starts gained 6 percent, institutional starts declined 5 percent and manufacturing starts dropped 15 percent.

Residential

Residential building starts declined 4 percent in December to a seasonally-adjusted annual rate of $339.5 billion. Single-family starts fell 7 percent during the month while multifamily improved 1 percent.

The largest multifamily structure to break ground in December was the $470 million 1000 Michigan South Loop Condo Tower in Chicago. Also starting in December was the $215 million Koula Mixed-Use Tower in Honolulu and the $170 million Alta Xmbly Block 23 facility in Somerville, Massachusetts.

For 2019 as a whole, residential starts dropped 3 percent compared to 2018, while single-family starts were down 1 percent and multifamily starts were down 7 percent.