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News Nov. 30, 2021

October construction starts rose 16% amid material and labor shortages

Dodge Data & Analytics, New York, has reported construction starts surged 16% in October as contractors continue to struggle with high materials prices, supply chain issues and labor shortages.

“Economic growth has resumed following the third quarter’s Delta-led slowdown,” said Richard Branch, chief economist for Dodge Data & Analytics. “However, the construction sector’s grip on growth remains tenuous. Long term, construction starts should improve, fed by an increase of nonresidential building projects in the planning pipeline and the recent passage of the infrastructure bill. Both will provide meaningful support and growth to construction in the year to come. This expectation, however, must be tempered by the significant challenges facing the industry: high prices, shortages of key materials, and the continued scarcity of skilled labor. While healing from the pandemic continues, there’s still a long road back to full recovery.”

Nonresidential building construction climbed 29% in October. Commercial construction starts decreased 4%, institutional starts rose 3%, and manufacturing starts soared 94%. The increase in nonresidential building construction largely can be attributed to two large projects kicking off in the manufacturing sector.

Residential building construction fell 8% in October. Single-family housing gained less than 1%, and multifamily construction decreased 24%.

Nonbuilding construction jumped 52% in October, solely because an $8.5 billion project began in the utility/gas plant sector.

For the 12 months ending October, nonresidential building was up 4% compared with the 12 months ending October 2020. Residential building rose 20%, and nonbuilding construction fell 1%.

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