Dodge Data: Construction starts down 2% in July with plunge in electric utility sector
- The value of construction starts between June and July fell 2% to a seasonally adjusted annual rate of $586.3 billion, Dodge Data & Analytics reported Friday.
- An increase in nonresidential commercial and manufacturing (4%), in addition to modest rise in the residential (3%) segment could not overcome a 17% plunge in the nonbuilding sector — dragged down by a 56% drop in electric utilities — which pulled down overall month-to-month starts.
- Year-to-date starts were down 11% to $372.2 billion from the same period in 2015, reflecting a smaller number of $1-billion-plus projects this year (four projects) versus last year (13 projects). Excluding these megaprojects, the year-to-date drop in starts would be 4%.
The decline in July starts pressed the Dodge Index down from its June reading of 126 to 124. Dodge Data & Analytics Chief Economist Robert A. Murray said the dip in starts in June and July are a result of public works and electric utilities, and these segments have "skewed" the year-to-date figures, despite a respectable showing in the nonresidential and residential categories. Murray added that the industry should see stronger starts this year as last year's uncertainty around energy prices has diminished, although the November elections could still delay investment.
Aside from the 56% dive in electric utility and gas plant starts, which Murray said was exaggerated after a particularly strong June, other nonbuilding negatives last month included highways/bridges (-8%), river/harbor development (-8%) and miscellaneous public works (-29%). However, sewer construction (86%) and water supply (48%) starts were positive.
Nonresidential's commercial segment saw a 3% bump from a 20% increase in office starts, a 3% increase in store construction and an 89% rise in manufacturing. However, warehouse (-6%) and hotel (-14%) starts were both down. On the institutional side, educational starts were down 5%, as were healthcare facilities (-4%). Transportation starts were up 11%, followed by amusement/recreational (11%), churches (8%) and public buildings (5%). Single-family starts increased by only 1%, overshadowed by multifamily's 9%.
Last week, unlike Dodge, ConstructConnect reported that the value of July nonresidential starts dropped 5.4%, a departure from the typical 3.5% seasonal increase. In addition, ConstructConnect indicated that nonresidential starts were up 11% year to date.
- PR Newswire July Construction Starts Slip 2 Percent
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