New construction starts drop 5 percent in September 2019

By |  October 17, 2019

Logo: Dodge Data & Analytics

New construction starts dipped 5 percent in September to a seasonally-adjusted annual rate of $774.1 billion, according to Dodge Data & Analytics.

This marks the second consecutive monthly decline in construction starts, following a 6 percent pullback in August.

By major sector, nonbuilding construction dropped 13 percent in September while residential construction fell 6 percent. Nonresidential construction starts, however, improved by 1 percent in September due a large manufacturing project, according to Dodge.

The drop in September moved the Dodge Index lower to 164, compared to 173 in August, marking the lowest reading for the Index since May. Even with the September decline, the Index remains relatively on par with its 2019 average of 167, Dodge says.

Through the first nine months of 2019, total construction starts dropped 3 percent compared to the same period in 2018 due to declines in both resident and nonresidential construction starts. On the plus side, Dodge says, nonbuilding construction starts are up 4 percent year-to-date as a result of gains in electric utilities/gas plants.

“Large projects continue to make their presence felt in the monthly statistics, sometimes obscuring underlying trends,” says Richard Branch, chief economist for Dodge Data & Analytics, who assumed his new position in September. “Nevertheless, construction starts have certainly throttled back in 2019 due to mounting uncertainty over the country’s economic health.”

Nonbuilding

Nonbuilding construction totaled $187 billion, at a seasonally-adjusted rate, in September, a 13 percent decline from August. Starts in the miscellaneous nonbuilding category declined 32 percent from August to September, highway and bridge starts dropped 12 percent, and electric utility/gas plant starts fell 10 percent. Environmental public works, meanwhile, improved 12 percent in September.

The largest nonbuilding construction project to begin in September was the $994 million Cotton Belt “Silver Line” Rail Corridor, a 26-mile rail line extending from Dallas-Fort Worth airport in Dallas to Shiloh Road in Plano, Texas.

Through the first nine months of 2019, nonbuilding construction was 4 percent higher compared to the same period in 2018 at $151.3 billion. Year-to-date, starts for electric utilities/gas plants were 132 percent higher while environmental public works improved 2 percent. However, miscellaneous nonbuilding starts dropped 24 percent and highways and bridges were 7 percent lower.

Nonresidential

Nonresidential building starts improved 1 percent in September to $287 billion, at a seasonally-adjusted rate. The improvement comes as a result of a 243 percent increase in manufacturing construction due to the starts of a large automotive plant. Commercial construction starts dropped 14 percent from August to September while institutional construction starts moved 1 percent lower.

The largest nonresidential building project to get underway in September was a $969 million consolidated rental car facility at Las Angeles International airport in Los Angeles.

Nonresidential building starts totaled $215 billion year-to-date through September, a drop of 4 percent compared to the same period in 2018. Commercial starts, however, were 6 percent higher due to the office, warehouse and parking categories. Institutional construction starts declined 3 percent through nine months, with all major categories posting setbacks, and manufacturing starts fell 39 percent year-to-date.

Residential

Residential building dropped 6 percent in September to seasonally-adjusted rate of $300 billion, with both single family and multifamily starts falling 6 percent from August to September.

The largest multifamily construction project to break ground in September was the $228 million Lakeshore East – Cirrus apartment tower in Chicago.

Through the first nine months of the year, residential construction starts declined 6 percent compared to the same period in 2018. Single family starts dropped 4 percent, while multifamily was down 11 percent year-to-date.

Zach Mentz

About the Author:

Zach Mentz is the managing editor for both Pit & Quarry and Portable Plants magazines. Zach is a graduate of the Tim Russert Department of Communications at John Carroll University. His previous experience also includes time spent in the Cleveland Indians communications department.

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