Total Construction Starts Dipped 18% In September, However Highway And Bridge Starts Rose 10%.
By Mark S. Kuhar
Total construction starts dipped 18% in September to a seasonally adjusted annual rate of $667.7 billion, essentially taking back August’s gain, according to Dodge Data & Analytics. While some of this decline is certainly payback from several large projects entering start in August, the drop in activity brought total construction starts below levels seen in June and July. Nonresidential starts fell 24%, while residential building dropped 21% over the month. Nonbuilding starts were 5% lower than August.
Highway and bridge starts rose 10%.
“That construction starts took a significant step back in September is disappointing, but also not surprising,” stated Richard Branch, chief economist for Dodge Data & Analytics. “The economic recovery has lost momentum and is showing strain since support provided to consumers and businesses from expanded unemployment insurance benefits and the Paycheck Protection Program have expired. The worsening budget crisis for state and local areas has also slowed growth in public project starts, particularly in the face of a somewhat uncertain outlook for federal infrastructure spending programs. The road to recovery will continue to be uneven and fraught with potholes until a vaccine is developed and widely adopted across the United States.”
Nonbuilding construction fell 5% in September to a seasonally adjusted annual rate of $176.3 billion. Highway and bridge starts rose for the third consecutive month, jumping 10%, while utility/gas plant starts moved up 21%. However, environmental public works and miscellaneous nonbuilding starts each lost 26% over the month.
The largest nonbuilding project to break ground in September was the $1.6 billion Guernsey Power Station in Pleasant City, Ohio. Also getting underway was the $727 million Seminole Electric natural gas fired power plant in Palatka, Fla., and the $330 million Liquids Expansion and Solids Treatment Plant in Chino, Calif.
Through the first nine months of the year, total nonbuilding starts were down 18%. Starts in the highway and bridge category were up 2%, while environmental public works fell 10%, miscellaneous nonbuilding was down 33%, and the utility/gas plant category was 43% lower.
Nonresidential building starts were down sharply over the month of September, falling 24% to $177.4 billion. There was little good news in the detail: institutional starts fell 8%, manufacturing starts were 48% lower, and commercial starts dropped 36%. Only two building types posted a gain in September – retail and public buildings.
The two largest nonresidential building projects to break ground in September were the $330 million second phase of the Iceberg Towers in Burbank, Calif., and the $330 million East Market Mixed-Use complex in Philadelphia. These projects were followed by the $296 million first phase of the Moffitt Cancer Center Hospital in Tampa.
Year-to-date through nine months, total nonresidential building starts were down 26%. Commercial starts declined 27%, while institutional starts were 18% lower. Manufacturing starts dropped a painful 56% compared to the first nine months of 2019.
Residential building starts lost 21% in September, falling to a seasonally adjusted annual rate of $314.0 billion. Single-family starts dropped 6% in the month as multifamily starts tumbled 54%.
The two largest multifamily structures to break ground in September were the $130 million AJ Railyards Mixed Use building in Sacramento, Calif., and the $130 million Sage Valley Apartments in West Valley City, Utah. The $125 million Avenir Mixed Use building in Jersey City was the next largest project to break ground.
Through the first nine months of 2020, residential construction starts were 1% higher than in the same period of 2019. Single family starts were up 6%, but multifamily starts were down 12%.