New constructions starts in August slipped 2 percent from July to a seasonally adjusted annual rate of $711.6 billion, according to Dodge Data & Analytics. The decline followed July’s 6 percent increase.
Nonresidential building in August was $268.3 billion (annual rate), a 14-percent gain that followed a 5-percent decline in July. The institutional building categories as a group soared 27 percent, led by a 174-percent hike by the transportation terminal category.
The nonbuilding construction sector in August dropped 24 percent after soaring 26 percent in July, reflecting decreased activity for public works and power plants. Residential building dropped 1 percent and commercial categories increased 11 percent in August.
For the first eight months of 2017, total construction starts on an unadjusted basis were $481.7 billion, down 1 percent from the same period a year ago.
The August data produced a reading of 151 for the Dodge Index (2000=100), compared to the 154 reported in July. The Dodge Index began 2017 on a heathy note, averaging 160 in the first quarter, but then fell 11 percent to 143 in the second quarter.
The readings for the Dodge Index in July and August suggest that total construction starts are on track for a partial rebound in the third quarter, although September will reflect some negative impact from Hurricanes Harvey and Irma.
“What stands out about the August statistics is the strength shown by the institutional side of nonresidential building, which is consistent with a broader trend that’s taken hold during 2017,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “The institutional building segment (which includes such project types as transportation terminals, convention centers, and educational facilities), is providing much of the lift this year to nonresidential building, while the commercial building segment has decelerated after a 20 [percent] surge in 2016. It’s believed that total construction starts for the U.S. should be able to register growth for 2017 as a whole, helped by this year’s strength for institutional building, notwithstanding the near term disruption to construction activity caused by Hurricane Harvey in the Houston area and Hurricane Irma in Florida.”