New construction starts in October dropped 9 percent to a seasonally adjusted annual rate of $742.9 billion, pulling back after a 14 percent jump in September, according to Dodge Data & Analytics.

Over the past two months, the pattern for total construction starts was shaped by nonresidential building, which was $258.7 billion (annual rate), down 30 percent in October after the 37 percent hike reported in September.

For the first ten months of 2017, total construction starts on an unadjusted basis were $631.2 billion, up 1 percent from the same period a year ago. The year-to-date gain for total construction was restrained by a 38 percent drop for the electric utility/gas plant category. If the electric utility/gas plant category is excluded, total construction starts during the first ten months of 2017 would be up 4 percent relative to the same period a year ago.

October’s data lowered the Dodge Index to 157 (2000=100), compared to a revised 173 for September which was the highest reading so far in 2017.

“The construction start statistics have occasionally been subject to ‘spikes’ on a monthly basis, boosted by the presence of several unusually large projects, and September definitely qualified as one of those ‘spikes’,” says Robert A. Murray, chief economist for Dodge Data & Analytics. “The pace for nonresidential building in September was unsustainably high, so October’s decline was expected. Nonresidential building is still on track to show moderate growth for 2017 as a whole, helping to keep the expansion for overall construction activity going. On the residential side, multifamily housing is retreating from a very strong 2016, but to this point the retreat has been modest. And, the downward pull coming from nonbuilding construction appears to be easing, given the ongoing strength shown by pipeline projects and some recent improvement by highways, bridges, and mass transit.”

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