Posted August 22, 2018

Dodge: New construction starts slide 9 percent in July

Nonresidential building pulls back after surge in June.

At a seasonally adjusted annual rate of $817.4 billion, new construction starts in July fell 9% from the elevated pace reported in June, according to Dodge Data & Analytics. The latest month’s decline followed strong gains for total construction starts during the previous two months, with May up 14% and June up 11%.

By major sector, nonresidential building dropped 22% after soaring 59% in June, which had been lifted by the start of two massive manufacturing plants and two massive office buildings. While July did see several large manufacturing and office projects reach groundbreaking, they were not the same magnitude as what took place in June.

The other two major sectors in July held close to their June amounts, with residential building up 2% and nonbuilding construction unchanged. During the first seven months of 2018, total construction starts on an unadjusted basis were $471.4 billion, up 2% from the same period a year ago. If the volatile electric utility/gas plant category is excluded, total construction starts during the January-July period of 2018 would be up 5% compared to last year.

The July statistics produced a reading of 173 for the Dodge Index (2000=100), down from the 190 for June which was the highest level so far during 2018. Looking at the first six months of 2018 on a quarterly basis, which eases some of the swings present in the monthly data, the Dodge Index averaged 165 during the first quarter and 170 during the second quarter. July’s 173 shows that at least the initial month of the third quarter is continuing the gradual upward trend shown by the first two quarters of this year.

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