Total construction starts in the final month of 2019 dropped 21% from the previous month to a seasonally adjusted annual rate of $800.4 billion. The sharp decline was largely a response to hefty gains posted in November’s utility and manufacturing sectors. When removing the influence of these two volatile sectors, total construction starts only fell 3% in December. By major sector, nonresidential building starts fell 20% in December, while nonbuilding starts dropped 41% and residential starts lost 4% over the month.

For the full year, total construction starts were essentially flat when compared to 2018 at $817.6 billion. In 2019, nonbuilding starts gained 7% due to large gains in utility starts, while nonresidential starts fell 1% and residential starts declined 3%. Removing the massive 112% gain in utility starts from the total would result in total construction declining 3% from the previous year.

“Last year (2019) will go down as one of the most volatile years for monthly construction starts due to the lumpy nature of large projects,” says Richard Branch, chief economist of Dodge Data & Analytics. “Looking beyond the influence of these massive projects, it is evident that the uncertainty surrounding trade policy weighed on construction activity last year.”

Nonresidential building dropped 20% from November to December to a seasonally adjusted annual rate of $289.5 billion. The main reason for the decline in December was a 93% drop in manufacturing after a large petrochemical plant broke ground in November. Institutional starts rose 6% over the month fueled by gains in healthcare and recreation. Commercial starts rose 5% in December due to solid gains in warehouses and parking structures.

The largest nonresidential building project to break ground in December was the $712 million National Geospatial Agency Headquarters in Saint Louis, Mo. Also breaking ground in December was a $570 million medical center renovation in Bethesda, Md., and a $400 million consolidated rental car facility at Newark International Airport.

For the full year, nonresidential building starts fell 1%. Commercial building starts rose 6% last year due to gains in warehouses and offices, while institutional starts fell 5% with activity in all major categories seeing a pull back. Manufacturing starts fell 15% in 2019.

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