Dodge Data & Analytics, New York, has reported construction starts decreased 5 percent in September. Total construction starts in September were down 1 percent compared with September 2017.
"The pace of construction starts has clearly slowed over the past three months, following what was unsustainably high levels during May and June," says Robert A. Murray, chief economist for Dodge Data & Analytics. "Since construction starts on a monthly basis are often subject to wide swings, it's useful to look at the recent pattern of activity on a quarterly basis."
"After sliding 7 percent in the fourth quarter of 2017, total construction starts strengthened 3 percent in this year's first quarter and then advanced another 4 percent in the second quarter," Murray continues. "The loss of momentum in July, August, and now September produced a 7 percent decline for the third quarter, in effect returning the pace of construction starts to the level reported at the end of last year. It's true that the rate of growth for construction starts has decelerated more in 2018, but it's still too early to say that the construction industry has rounded the peak and is now in decline. There are of course mounting headwinds affecting construction, namely rising interest rates and higher material costs, but for now these have been balanced by stronger economic growth, some easing of bank lending standards, still healthy market fundamentals for commercial real estate, and greater state financing for school construction and enhanced federal funding for public works."
Nonresidential building construction decreased 6 percent in September. In the commercial category, manufacturing plant construction climbed 36 percent; hotel construction was unchanged; store construction dropped 4 percent; warehouse construction decreased 4 percent; and office construction declined 38 percent. In the institutional category, transportation terminal construction surged 153 percent; churches climbed 17 percent; amusement-related construction grew 11 percent; educational building construction fell 13 percent; health care facility fell 26 percent; and public buildings plunged 37 percent.
Residential building construction rose 2 percent in September. Single-family housing increased 2 percent, and multifamily construction grew 1 percent.
Nonbuilding construction fell 13 percent in September.
During the first nine months of 2018, nonresidential building was down 7 percent compared with the same time period in 2017. Residential building increased 6 percent, and nonbuilding construction dropped 4 percent. By geographic region, the South Central increased 12 percent; South Atlantic rose 6 percent; Midwest grew 1 percent; West declined 4 percent; and Northeast dropped 19 percent.
