January Construction Starts Rise 2%

New York City (Feb. 22, 2019)—The value of new construction starts in January advanced 2 percent compared to December, reaching a seasonally adjusted annual rate of $722.5 billion, according to Dodge Data & Analytics. The slight gain followed the loss of momentum that was reported towards the end of 2018, with total construction declines of 7 percent in November and 10 percent in December. 

Each of the three main construction sectors in January registered modest growth. Residential building climbed 4 percent, lifted by a rebound for multifamily housing. Nonresidential building edged up 1 percent, reflecting a stronger pace for its commercial building segment, including large office projects in Reston, Virginia; Houston, Texas; Boston, Massachusetts; Austin, Texas; and Seattle Washington. Nonbuilding construction also edged up 1 percent, helped by the start of a $1.0 billion-natural gas pipeline in Oklahoma and several large electric utility projects. 

The January statistics produced a reading of 153 for the Dodge Index (2000=100), compared to December’s 150. During 2018, the pattern of construction starts featured especially strong activity in June and October, which was then followed by declines in the months immediately following. This led to December’s reading of 150 for the index, which was at the low end of last year’s range of activity. 

“January’s slight increase suggests that construction starts are beginning to stabilize after the diminished activity reported at the end of last year,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “This is consistent with the belief that total construction starts for 2019 will be able to stay close to last year’s volume. It’s true that the rate of growth for total construction starts has subsided from the 7-percent annual gain reported back in 2017, but it’s still too early to say that construction activity has made the transition from deceleration to decline.”

Useful perspective is gained by looking at 12-month moving totals, in this case the 12 months ending January 2019 versus the 12 months ending January 2018—construction starts have held steady. (On an unadjusted basis, total construction starts in January were $51.5 billion, down 12 percent from the same month a year ago.)

For more details, visit construction.com.