New construction starts slip further in September

By |  October 22, 2015

New construction starts in September dropped 5 percent from the previous month to a seasonally adjusted annual rate of $523.7 billion, according to Dodge Data & Analytics.

The Dodge Momentum Index produced a reading of 111 in September, which is down from 117 in August.

Dodge Data & Analytics reports a decrease in activity for both nonresidential building and housing, while the nonbuilding construction sector managed a partial rebound after its August decline. Through the first nine months of 2015, total construction starts were $497.4 billion, up 12 percent from the same period of a year ago.

“The level of construction starts was subdued during both August and September, retreating from the strength shown earlier in the year,” says Robert A. Murray, chief economist for Dodge Data & Analytics. “While activity has leveled off in the near term for its commercial and institutional segments, much of this year’s softness for nonresidential building is related to a decreased amount of manufacturing plant construction, adversely affected by the sluggish global economy and falling energy prices.”

Excluding the electric utility and gas plant category, total construction starts during the first nine months of 2015 would be up 5 percent relative to last year. Murray says economic factors that influence the commercial and institutional segments remain positive. He says the exceptional amount of nonbuilding construction starts in the first half of 2015 was not sustainable, and activity is now proceeding at a more moderate pace.

Going forward, Murray says the performance of nonbuilding construction will be heavily affected by the progress made by Congress in passing its next multiyear federal transportation bill.

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