Posted July 22, 2020

Dodge: Construction starts show additional gains in June

lmprovement in nonresidential and nonbuilding activity push starts higher.

Total construction starts increased 6% in June to a seasonally adjusted annual rate of $641.4 billion. This marks the second consecutive monthly gain in construction starts following the COVID-19 induced declines in March and April.

ln June nonresidential building starts gained 6% and starts in the nonbuilding sector moved 27% higher. Residential starts, by contrast, fell 6% during the month.

Through the first six months of the year; starts were down 14% from the same period in 2019. Nonresidential starts fell 22%, nonbuilding starts were down 14%, and residential starts dropped 5%.

For the 12 months ending in June 2020, total construction starts were down 2% from the previous 12 months. Nonresidential building starts were down 7% and residential building starts were flat, but nonbuilding starts were 3% higher in the past 12 months. ln June, the Dodge lndex moved 6% higher to 136 (2000=100) from the 128 reading in May. Compared to a year earlier, the Dodge lndex was down 28o%.

"Construction starts activity remains significantly weaker than year-ago levels, even though it has been slowly increasing since its nadir in April," stated Richard Branch Chief Economist for Dodge Data & Analytics. "May's gain in starts was fueled by a handful of very large projects, but June's gain appears to be much more organic in nature. Construction starts should continue to post modest gains in the months to come as the economy continues to recover from the shortest and steepest recession in U.S. history.

"However, the recent acceleration in new COVID-l9 cases in states such as Texas, Florida, and California is a significant downside risk to the economy and the construction
ind ustry's growth trajectory."

Nonbuilding construction rose 27% in June to a seasonally adjusted annual rate of $191.1 billion. Utility/gas plants moved 108% higher in the month due to the start of over $2.0 billion in renewable power projects (split between solar and wind facilities). The miscellaneous nonbuilding category rose 63% in June, while environmental public works moved 38% higher. Construction starts for highways and bridges dropped 4% during the month.

Through June, total nonbuilding starts were down 14% compare to the same time period in 2019. Highway and bridge construction starts were up 8%, while environmental public works and the miscellaneous nonbuilding sector were each 20% lower through the flrst six months of the year.

Utilities/gas plants were down 40% on a year-to-date basis. On a 12- month rolling basis, total nonbuilding starts were up 3% from the 12 months ending June 2020.

Starts in the utility/gas plant category were 14% higher; while miscellaneous nonbuilding starts increased 6%. Street and bridge starts were 1% lower for the 12 months ending June, while environmental public works were down 4%.

Nonresidential building starts moved 6% higher in June to a seasonally adjusted annual rate of $198.5 billion. lnstitutional building starts rose 15% during the month, while commercial building starts moved 4% higher. Manufacturing starts, however, fell 32%  following the start of a $950 million steel plant in May.

On a year-to-date basis, total nonresidential building starts were 22% lower than the first six months of 2019. lnstitutional building starts were down 15%, while commercial starts were 27% lower. Manufacturing starts dropped 38% on a year-to-date basis. On a12- month total basis, total nonresidential building starts were 7% lower than the 12 months ending June 2019. Commercial starts have dropped 8%, while institutional starts were down 9%. Manufacturing starts aregoto higher on a rolling 12-month basis.

Residential building starts fell 6% in June to a seasonally adjusted annual rate of $251.8 billion. Both multifamily and single family starts were lower during the month, with single family falling 7% and multifamily dropping 4%.

Through the first six months of 2020, residential construction starts were down 5% versus the same time period in 2019. Single family starts were 1% lower, while multifamily starts were down 16% year-to-date. For the 12 months ending in June, total residential starts were flat when compared to the prior 12 months. Single family starts were up 3%, while multifamily starts were off 6%.

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