Dodge: Construction starts slip 4 percent in April

By |  May 18, 2023

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Total construction starts fell 4 percent in April to a seasonally adjusted annual rate of $1.04 trillion, according to Dodge Construction Network.

Nonresidential starts led the drop, as manufacturing fell 22 percent following a strong performance in March. To balance the decline, nonbuilding starts rose 7 percent, and residential building starts gained 12 percent.

On a year-to-date basis through April, total construction starts were 7 percent below the first four months of 2022. Residential starts were down 27 percent, and nonresidential and nonbuilding starts grew 7 percent and 16 percent, respectively.

For the 12 months ending April 2023, total construction starts were 11 percent higher than the 12 months ending April 2022. Nonresidential and nonbuilding starts both showed gains at 34 percent and 24 percent, respectively. Residential starts, however, hindered overall growth with a 13 percent decline on a 12-month rolling basis.

“The construction sector continues to sweep its economic worries under the rug, even with inflation, unstable banking and the potential breach of the U.S. debt ceiling,” says Richard Branch, chief economist at Dodge Construction Network. “While the presence of, or lack thereof, large manufacturing projects each month has made the data more volatile, the underlying trends point to a very healthy sector.

“However, this is likely transitory,” Branch adds. “The Dodge Momentum Index, which tracks projects entering the earliest stages of planning, is falling, which should lead to weaker starts in the second half of the year – especially for the private sector.”

Nonbuilding

Nonbuilding construction starts improved 7 percent in April to a seasonally adjusted annual rate of $281 billion, according to Dodge Construction Network.

The utility/gas plant category had the largest gain in the month, rising 76 percent, with a small increase in street and bridge starts at 5 percent. Miscellaneous nonbuilding starts fell 16 percent, and environmental public works lost 17 percent.

Through April, 2023 nonbuilding starts gained 16 percent. Utility/gas plants rose 37 percent, and miscellaneous nonbuilding starts were up 36 percent. Environmental public works rose 10 percent, and highway and bridge starts gained 9 percent.

For the 12 months ending April 2023, total nonbuilding starts were 24 percent higher than the 12 months ending April 2022 – with significant gains across each sector. Utility/gas plant starts rose 43 percent, miscellaneous nonbuilding starts were 27 percent higher, highway and bridge starts were up 20 percent, and environmental public works rose 17 percent on a 12-month rolling-sum basis.

The largest nonbuilding projects to break ground in April were the $750 million Magnolia Power/Kindle Energy generating station in Plaquemine, Louisiana, the $738 million Rock Creek wind farm in Laramie, Wyoming, and the $542 million Eagle LNG export facility in Jacksonville, Florida.

Nonresidential

Nonresidential building starts declined 22 percent in April to a seasonally adjusted annual rate of $383 billion. This sharp decline follows an equally large one in March.

In April, manufacturing starts lost a staggering 68 percent. Institutional starts dropped 13 percent, largely due to a pullback in health care construction. Commercial starts improved 5 percent thanks to an increase in retail and office construction.

Through four months of 2023, total nonresidential starts were 7 percent higher than in the first four months of 2022. Institutional starts gained 14 percent, manufacturing starts were 4 percent higher and commercial starts were up 2 percent.

Between April 2022 and April 2023, total nonresidential building starts were 34 percent higher than April 2021 through April 2022. Manufacturing starts were 118 percent higher, institutional starts improved 22 percent and commercial starts gained 18 percent.

The largest nonresidential building projects to break ground in April were the $1.2 billion Hanwha Qcells solar plant manufacturing plant in Cartersville, Georgia, the $650 million Group14 battery plant in Moses Lake, Washington, and the $600 million Mutual of Omaha headquarters in Omaha, Nebraska.

Residential

Residential building starts increased 12 percent in April to a seasonally adjusted annual rate of $373 billion.

Single-family and multifamily starts remained strong, increasing 14 percent and 10 percent, respectively.

On a year-to-date basis through April 2023, total residential starts were down 27 percent. Single-family starts were 34 percent lower, and multifamily starts were down 10 percent.

For the 12 months ending April 2023, residential starts were 13 percent lower than the 12 months ending April 2022. Single-family starts were 25 percent lower while multifamily starts were up 14 percent on a rolling 12-month basis.

The largest multifamily structures to break ground in April were the $549 million Mana’olana Place mixed-use building in Honolulu, a $500 million mixed-use building in Flushing, New York, and the $385 million 710 Broadway Apartments in Santa Monica, California.

Kevin Yanik

About the Author:

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

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