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August contracts decreased 9 percent

Dodge Data & Analytics, New York, has reported construction starts decreased 9 percent in August. Total construction starts in August were up 1 percent compared with August 2017.

"The pace of construction starts weakened substantially in August, but remained within the range of activity witnessed so far in 2018, admittedly at the low end," says Robert A. Murray, chief economist for Dodge Data & Analytics. "For nonresidential building, the boost coming from very large projects in August was not as strong as what took place in late spring, even with the August start of such projects as a $520 million office building in Sacramento, Calif., and a $500 million hospital expansion in Cincinnati. Accordingly, it would be too early to say that nonresidential building has already peaked and is now retreating, given the volatility that arises in the monthly data from the presence or absence of very large projects. Market fundamentals affecting commercial building such as occupancies have yet to weaken discernibly, and funding for such institutional projects as school construction remains supportive.

"For residential building, multifamily housing appears to be easing back in a broad sense from the strength shown earlier in 2018, and a similar pattern could be emerging for single family housing," Murray continues. "Even so, on a year-to-date basis, residential building continues to register growth. As for public works, it's still on an upward track, helped this year by increased construction starts for highways and environmental projects like storm sewers, while pipeline and rail transit projects are staying close to the brisk pace reported in 2017."

Nonresidential building construction decreased 19 percent in August. In the commercial category, store construction dropped 15 percent; office construction declined 17 percent; warehouse construction decreased 22 percent; hotel construction fell 39 percent; and manufacturing plant construction plunged 53 percent. In the institutional category, health care facility surged 27 percent; amusement-related construction grew 11 percent; educational building construction rose 3 percent; churches declined 8 percent; public buildings fell 29 percent; and transportation terminal construction plunged 63 percent.

Residential building construction fell 7 percent in August. Single-family housing decreased 7 percent, and multifamily construction dropped 8 percent.

Nonbuilding construction rose 6 percent in August.

During the first eight months of 2018, nonresidential building was down 1 percent compared with the same time period in 2017. Residential building increased 6 percent, and nonbuilding construction dropped 3 percent. By geographic region, the South Central increased 10 percent; South Atlantic rose 6 percent; Midwest grew 2 percent; West declined 5 percent; and Northeast dropped 6 percent.


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