New construction starts increased 4 percent in October to a seasonally adjusted annual rate of $592.7 billion, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. Gains were reported for nonresidential building and nonbuilding construction, while the residential sector fell slightly. Through the first 10 months of 2004, total construction on an unadjusted basis came to $495.3 billion, up 9 percent from the same period in 2003.
The October statistics lifted the Dodge Index to 179 (1996=100), up from a revised 171 for September. The 179 represents the third highest reading for the Dodge Index so far in 2004, after the 184 in July and the 180 in May. The 10-month average for the Dodge Index during 2004 comes to 173, compared to a reading of 160 for the full year 2003.
Nonresidential building in October jumped 11 percent to $163.3 billion (annual rate). Gains were present throughout most of the nonresidential structure types, led by a 58 percent increase for offices. During the first 10 months of 2004, the dollar volume of office construction was up 14 percent compared to 2003. October also showed improved activity for the other commercial structure types, including warehouses, up 3 percent; stores, up 5 percent; and hotels, up 18 percent. The year-to-date performance for these structure types was the following: stores, up 4 percent; warehouses, up 8 percent; and hotels, up 14 percent. On the negative side, manufacturing plant construction in October retreated 41 percent from a September that included the start of large projects in the biotech and automotive industries.
On the institutional side of the nonresidential market, school construction was up 16 percent in October. This follows a subdued performance in September, and suggests that new construction starts for schools may now be stabilizing after generally decreased activity during 2004. Growth was also reported for amusement-related projects, up 18 percent; and healthcare facilities, up 21 percent. October witnessed reduced contracting for churches, down 7 percent; and public buildings, down 25 percent.
Residential building in October was down 1 percent to $329.7 billion (annual rate). Single-family housing held steady in dollar terms, while multifamily housing settled back 2 percent. The single-family market remains at a very high volume-year-to-date contracting in dollar terms was up 17 percent, but activity now appears to be leveling off. On a regional basis, residential building in October featured 5 percent declines in the South Central and the West, a 1 percent decline in the Northeast, and 4 percent gains in the South Atlantic and Midwest.
The 9 percent increase for total construction during the January-October period of 2004, compared to last year, was due to this performance by sector: residential building, up 16 percent; nonresidential building, up 3 percent; and nonbuilding construction, unchanged.
By geography, total construction in the first 10 months of 2004 was the following: the South Atlantic, up 13 percent; the West, up 12 percent; the Northeast and South Central, each up 7 percent; and the Midwest, up 4 percent.
