Construction starts soar 21 percent in October 2018

By |  November 20, 2018
New construction starts in October climbed 21 percent to a seasonally adjusted annual rate of $864 billion.

New construction starts in October climbed 21 percent to a seasonally adjusted annual rate of $864 billion. Graphic courtesy of Dodge Data & Analytics.

New construction starts in October climbed 21 percent to a seasonally adjusted annual rate of $864 billion, according to Dodge Data & Analytics.

The substantial increase followed three straight months of decline, during which the pace of total construction starts fell 22 percent from the exceptionally strong volume reported back in June.

Nonresidential building in October surged 53 percent, as several very large projects lifted the manufacturing plant, office building and transportation terminal categories. Nonbuilding construction in October advanced 14 percent, supported by growth for public works while the electric utility/gas plant category bounced back from depressed activity in September.

Residential building in October edged up 2 percent, helped by improvement for multifamily housing. During the first 10 months of 2018, total construction starts on an unadjusted basis were $679.1 billion, up 1 percent from the same period a year ago.

The year-to-date gain for total construction starts was restrained by a 45 percent slide for the electric utility/gas plant category. If the electric utility/gas plant category is excluded, total construction starts during the first 10 months of 2018 would be up 3 percent relative to the same period a year ago.

October’s data raised the Dodge Index to 183, up from September’s 150, marking the second highest reading for the Dodge Index so far in 2018 after June’s 192. Through the first 10 months of 2018, the Dodge Index averaged 169, up slightly from the full year 2017 average of 166.

“During 2018, the presence of very large projects in a given month has played a considerable role in shaping the monthly pattern of activity, and in October it was nonresidential building that especially benefitted from the start of very large projects,” says Robert Murray, chief economist for Dodge Data & Analytics. “These included a $2.4 billion petrochemical plant in Texas, the $1.4 billion Terminal One building at Newark Liberty International Airport, the $860 million expansion to the Las Vegas Convention Center, a $750 million Facebook data center in Utah, and a $655 million concourse expansion at Denver International Airport that’s part of that facility’s extensive upgrade.

“Earlier, decreasing construction starts for nonresidential building during this year’s third quarter raised some concern, suggesting that this sector may have already peaked and is now in decline,” Murray adds. “The strong October performance indicates that nonresidential building construction starts continue to proceed at an elevated pace, at least for the present.”

About the Author:

Kevin Yanik is the editor-in-chief of Pit & Quarry magazine. Yanik can be reached at 216-706-3724 or kyanik@northcoastmedia.net.

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