April Construction Starts Retreat 15 Percent

July 2019

The value of new construction starts in April fell 15 percent to a seasonally adjusted annual rate of $685.2 billion, pulling back following the 16 percent hike that was reported in March, according to Dodge Data & Analytics. Steep declines were registered by two of the three main construction sectors. Nonbuilding construction plunged 31 percent, and nonresidential building fell 18 percent. Meanwhile, residential building in April decreased 1 percent, as a modest rebound for multifamily housing was outweighed by further slippage for single-family housing. During the first four months of 2019, total construction starts on an unadjusted basis were $224.5 billion, down 8 percent from the same period of 2018. On a 12-month moving total basis, total construction starts for the 1 months ending April 2019 held steady with the corresponding amount for the 12 months ending April 2018.
    
April’s data lowered the Dodge Index to 145 (2000=100), down from 171 in March. Taking the average for March and April produces an Index reading of 158, which is above the 150 average for January and February, yet still below the 171 average for all of 2018.
    
“The construction start statistics can be volatile on a month-to-month basis, and that’s certainly been true in March and April, as a 16 percent jump was followed by a 15 percent decline,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “Much of the volatility can be attributed to the presence or absence of large projects—in March there were 10 projects valued each at $500 million or more that reached groundbreaking, while April saw only two such projects. Amidst this volatility, there are several trends about 2019 construction activity that are beginning to emerge. Overall construction activity continues to show deceleration around an up-and-down monthly pattern, with a varied performance by major construction sector. The public works side of nonbuilding construction got off to a slow start in 2019, which at least through March was partially offset by an upturn for electric utilities/gas plants. Some improvement for public works is expected as the current year proceeds, given the fiscal 2019 federal funding approved back in February as well as the continued support of state construction bond measures. Nonresidential building is staying close to its pace of last year, helped by continued strength for office buildings, hotels, educational facilities, and transportation terminals. The multifamily side of residential building is retreating, even with the occasional monthly upturn, while single-family housing has not yet provided evidence that it can rebound from the slower pace that took hold toward the end of last year.”