Construction starts fall in September 2018

Chart courtesy of Dodge Data & Analytics

New construction starts in September 2018 dropped 5 percent from the previous month to a seasonally-adjusted annual rate of $709.6 billion, according to Dodge Data & Analytics.

The September downturn comes on the heels of 9 percent drops in both August and July of this year, as the pace of construction starts declined for three straight months following the current year’s high in June. September’s data produced a reading of 150 for the Dodge Index after the 157 reported for August.

“The pace of construction starts has clearly slowed over the past three months, following what was unsustainably high levels during May and June,” says Robert Murray, chief economist for Dodge Data & Analytics.

By major sector, nonresidential building declined further in September by 6 percent while nonbuilding construction dropped 13 percent due to retrenchment for the electric utility/gas plant category. Residential building, however, improved by 2 percent in September.

Through the first nine months of 2018, total construction starts on an unadjusted basis were $599.9 billion, down 1 percent from the same time period last year.

“Since construction starts on a monthly basis are often subject to wide swings, it’s useful to look at the recent pattern of activity on a quarterly basis,” Murray says. “After sliding 7 percent in the fourth quarter of 2017, total construction starts strengthened 3 percent in this year’s first quarter and then advanced another 4 percent in the second quarter. The loss of momentum in July, August, and now September produced a 7 percent decline for the third quarter, in effect returning the pace of construction starts to the level reported at the end of last year.”