January 2019 construction starts increase 2 percent

By |  February 27, 2019
Each of the three main construction sectors in January 2019 registered modest growth. Chart courtesy of Dodge Data & Analytics (Click to enlarge)

Each of the three main construction sectors in January 2019 registered modest growth. Chart courtesy of Dodge Data & Analytics (Click to enlarge)

The value of new construction starts in January advanced 2 percent compared with December 2018, reaching a seasonally adjusted annual rate of $722.5 billion, according to Dodge Data & Analytics. In addition, the January statistics produced a reading of 153 for the Dodge Index.

On an unadjusted basis, total construction starts in January were $51.5 billion, which is down 12 percent from January 2018.

“January’s slight increase suggests that construction starts are beginning to stabilize after the diminished activity reported at the end of last year,” says Robert Murray, chief economist for Dodge Data & Analytics. “This is consistent with the belief that total construction starts for 2019 will be able to stay close to last year’s volume. It’s true that the rate of growth for total construction starts has subsided from the 7 percent annual gain reported back in 2017, but it’s still too early to say that construction activity has made the transition from deceleration to decline.”

Nonresidential building in January was $245.2 billion, which was up 1 percent following a 13 percent drop in December. According to Dodge Data & Analytics, the commercial building categories as a group rose 4 percent in January, with office construction climbing 18 percent and hotel construction increasing 10 percent. In addition, the commercial garage category advanced 21 percent and manufacturing plant construction grew 9 percent while warehouses fell 13 percent and store construction dropped 24 percent.

The institutional side of nonresidential building slipped 2 percent in January, with educational facilities falling 10 percent, healthcare facilities dropping 11 percent and church construction retreating 34 percent. Despite this, the public buildings category jumped 46 percent, the transportation terminal category rose 39 percent and amusement-related construction improved 1 percent.

Residential building in January was $309.8 billion, up 4 percent. Multifamily housing bounced back 14 percent, following its 15 percent December decline. In addition, single-family housing remained unchanged from December.

Finally, nonbuilding construction in January was $167.5 billion, up 1 percent, Dodge Data & Analytics reports. The electric utility/gas plant category jumped 44 percent and the public works categories as a group dropped 4 percent, with highways and bridges down 5 percent, sewer construction down 5 percent, water supply construction down 22 percent and river/harbor development down 34 percent. Miscellaneous public works, however, rose 20 percent.

According to Dodge Data & Analytics, the 12 percent decline for total construction starts on an unadjusted basis for January 2019 relative to January 2018 was due to decreased activity for each of the three major sectors. Nonresidential building dropped 12 percent from a year ago, residential building fell 13 percent and nonbuilding construction fell 10 percent.

“In early 2019, there are several near-term positives for construction,” Murray says. “Interest rates have settled back from levels reached during last year’s fourth quarter, material prices appear to be rising more slowly, and the partial government shutdown was brought to a close. The federal budget deal signed into law on Feb. 15 included a 2 percent increase to $45.3 billion for the federal-aid highway obligation ceiling, as called for by the 2015 Fixing America’s Surface Transportation Act.”

Allison Kral

About the Author:

Allison Kral is the former senior digital media manager for North Coast Media (NCM). She completed her undergraduate degree at Ohio University where she received a Bachelor of Science in magazine journalism from the E.W. Scripps School of Journalism. She works across a number of digital platforms, which include creating e-newsletters, writing articles and posting across social media sites. She also creates content for NCM's Portable Plants magazine, GPS World magazine and Geospatial Solutions. Her understanding of the ever-changing digital media world allows her to quickly grasp what a target audience desires and create content that is appealing and relevant for any client across any platform.

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