Construction Starts Rise; Highways Lower

Highway And Bridge Starts Were Both 7% Lower For The Month And For The 12 Months Ending In October 2021.

By Mark S. Kuhar

Total construction starts rose 16% in October to a seasonally adjusted annual rate of $1.01 trillion, according to Dodge Construction Network. 

Nonresidential building starts gained 29% and nonbuilding moved 52% higher in October, while residential starts lost 8%. The month’s gains resulted from the start of two massive manufacturing plants and an LNG export facility. Without these projects, total construction starts would have fallen 6% in October.

Highway and bridge starts were both 7% lower for the month and for the 12 months ending in October 2021.

“Economic growth has resumed following the third quarter’s Delta-led slowdown. However, the construction sector’s grip on growth remains tenuous,” stated Richard Branch, chief economist for Dodge Construction Network. “Long term, construction starts should improve, fed by an increase of nonresidential building projects in the planning pipeline and the recent passage of the infrastructure bill. Both will provide meaningful support and growth to construction in the year to come. This expectation, however, must be tempered by the significant challenges facing the industry: high prices, shortages of key materials, and the continued scarcity of skilled labor. While healing from the pandemic continues, there’s still a long road back to full recovery.”

Nonbuilding Construction  
Nonbuilding construction starts rose 52% in October to a seasonally adjusted annual rate of $268.4 billion. This increase was solely due to the start of an LNG export facility, which lifted the utility/gas plant category significantly. However, even without this project, the category would still have registered a strong gain because of the very low level of activity in September. 

The public works side of nonbuilding construction was more dismal. Miscellaneous nonbuilding starts fell 43% over the month, and highway/bridge and environmental public works starts lost 14% and 16%, respectively. 

Year-to-date, total nonbuilding starts were 2% higher through October. Environmental public works were 23% higher, and utility/gas plant starts are up 14%. At the same time, highway and bridge starts were 7% lower and miscellaneous nonbuilding fell 13%.

The largest nonbuilding projects to break ground in October were the $8.5 billion Venture Global LNG Export facility in Plaquemines Parish, La., and the $484 million Moses-Adirondack SMART PATH 1&2 Lines rebuild project in Lewis and St. Lawrence counties, New York.

Nonresidential Building 
Nonresidential building starts shot 29% higher in October to a seasonally adjusted annual rate of $357.2 billion. The catalyst for the increase was a large gain in the manufacturing sector as two major projects kicked off. If not for these projects, total nonresidential building starts would have been down 3% over the month. In October, commercial starts lost 4%, with only hotels posting a gain. 

Institutional starts gained 4%, with all categories rising. In the first 10 months of 2021, nonresidential building starts were 11% higher. Commercial starts increased 9%, manufacturing starts were 94% higher (39% without the large projects this month), and institutional starts were up 3%.

The largest nonresidential projects to break ground in October were the $6.0 billion first phase of the Taiwan Semiconductor plant in Phoenix, and the $1.3 billion Methanex Methanol plant in Geismar, La.

Residential Building 
Residential building starts fell 8% in October to a seasonally adjusted annual rate of $388.6 billion. Single-family starts gained less than 1%, while multifamily starts fell 24%. Through the first 10 months of 2021, residential starts were 21% higher than in the prior-year period. Single family starts gained 22% and multifamily starts grew 10%.

The largest multifamily structures to break ground in October were the $286 million first phase of the Archer Towers in Jamacia, N.Y., and the $120 million residential portion of a mixed-use building on 3rd Ave in Bronx, N.Y.

Regionally, total construction starts improved in the South Central and West regions, while slipping in the Northeast, Midwest, and South Atlantic regions.


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