New Construction Starts in February Recede 3 Percent
At a seasonally adjusted annual rate of $708.1 billion, new construction starts in February slipped 3 percent from the previous month, according to Dodge Data & Analytics. The reduced activity in February followed a 2 percent decline in January, as the early months of 2018 are showing some loss of momentum after the 12 percent increase reported back in December. The nonbuilding construction sector, comprised of public works and electric utilities/gas plants, fell 23 percent in February, resulting in the decline for total construction starts for the second month in a row. In contrast, nonresidential building grew 5 percent in February, continuing the strengthening trend which resumed in December, and residential building improved a slight 1 percent. During the first two months of 2018, total construction starts on an unadjusted basis were $102.4 billion, down 7 percent from the same period a year ago which had been lifted by the start of several unusually large projects, including the $3.6 billion Central Terminal replacement project at LaGuardia Airport in New York, New York. On a twelve-month moving total basis, total construction starts for the twelve months ending February 2018 were up 2 percent from the twelve months ending February 2017.
The February statistics produced a reading of 150 for the Dodge Index (2000=100), compared to 154 for January. “The 152 average for the Dodge Index during the first two months of 2018 is the same as the 152 average reported for the fourth quarter of 2017, as the pace of construction starts viewed over several months seems to have leveled off,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “What’s important to keep in mind is that the moderately subdued amount for total construction starts during the first two months of 2018 reflects diminished activity by public works and electric utilities, which given their inherent volatility are likely to bounce back over the next month or two. Compared to last year’s fourth quarter, the first two months of 2018 have seen further increases for nonresidential building, helped by its institutional building segment, and residential building, helped by multifamily housing. This suggests that the construction expansion, while slowing, is still in progress.”