August Construction Starts Decrease 6 Percent

New construction starts dropped 6% over the month in August to a seasonally adjusted annual rate of $807.1 billion, according to Dodge Data & Analytics. August’s decline breaks a string of three consecutive month-to-month gains. By major sector, nonbuilding construction fell 15% in August, reversing the large increases made in the previous month when several notable projects started. The declines in residential and nonresidential building were milder – falling 1% and 3% respectively in August.

Year-to-date through eight months, total construction starts were 5% lower than the same period a year ago due to declines in residential and nonresidential buildings. Nonbuilding construction activity was 3% higher through the first eight months of the year due to gains in electric utilities/gas plants.

“The August decline was expected after July’s robust level of starts,” says Richard Branch, chief economist for Dodge Data & Analytics. “Furthermore, the year-to-date activity continued to suggest that this year’s levels are easing back from what was seen in 2018 – essentially mirroring the slowdown in overall economic growth.”

Nonresidential Building

Nonresidential building starts dropped 3% from July to August, to $283.9 billion (at a seasonally adjusted annual rate). August’s decline was the direct result of a 66% drop in manufacturing starts, which had soared in July when the $1.0 billion Foxconn manufacturing complex broke ground in Mount Pleasant, Wis. Commercial construction starts rose 7% in August to $135.2 billion (annual), the result of increases in offices and warehouses. Institutional starts rose 2% in August to $138.2 billion (annual) due to increases in health and education facilities.

Through the first eight months of 2019, nonresidential building starts totaled $188.2 billion, a decline of 7% over the same time frame of 2018. Commercial starts were 3% higher year-to-date, fueled by gains in offices, warehouses and parking structures. Starts for stores and hotels were lower through the first eight months of this year. Institutional construction was 5% lower year-to-date at $92 billion with declines evident across all institutional categories. Manufacturing construction starts were 46% lower year-to-date.

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