iStock/Getty Images Plus
Getty Images 855256042

Construction Starts Fall 21 Percent in December

Jan. 22, 2020
Starts for electric utility/gas plants declined while two large wind projects broke ground, according to Dodge Data & Analytics.

According to Dodge Data & Analytics, total construction starts in the final month of 2019 dropped 21 percent from the previous month to a seasonally adjusted annual rate of $800.4 billion. The sharp decline was largely a response to hefty gains posted in November’s utility and manufacturing sectors. When removing the influence of these two very volatile sectors, total construction starts only fell 3 percent in December. By major sector, nonresidential building starts fell 20% in December, while nonbuilding starts dropped 41 percent, and residential starts lost 4 percent over the month.

The pullback in December pushed the Dodge Index down to 169 (2000=100) compared to the 213 posted in November, and just below the 12-month average of 174.

For the full year, total construction starts were essentially flat when compared to 2018 at $817.6 billion. In 2019, nonbuilding starts gained 7% due to large gains in utility starts, while nonresidential starts fell 1% and residential starts declined 3%. Removing the massive 112% gain in utility starts from the total would result in total construction declining 3% from the previous year.

“Last year (2019) will go down as one of the most volatile years for monthly construction starts due the lumpy nature of large projects,” stated Richard Branch, chief economist of Dodge Data & Analytics. “Looking beyond the influence of these massive projects, it is evident that the uncertainty surrounding trade policy weighed on construction activity last year.”

Nonbuilding construction fell 41 percent in December to a seasonally adjusted annual rate of $171.4 billion following an extremely strong November, which saw the start of several large projects. The only category to post a gain in December was environmental public works, which increased 1 percent. Starts of electric utility/gas plants fell 76%, while highway and bridge starts fell 18% and miscellaneous nonbuilding starts dropped 17% from November to December.

The largest nonbuilding construction project to break ground in December was the $900 million Sagamore Wind Farm project in Roosevelt County, New Mexico. Also starting in December was the $400 million Deuel Harvest Wind Farm in Clear Lake, South Dakota, and a $400 million extension of US 401 to I-40 in Raleigh NC.

For the full year of 2019, nonbuilding construction rose 7 percent thanks to a 112 percent gain in the electric utility/gas plant category. When removing that category from total nonbuilding, starts were down 8% for the year. Environmental public works gained 4% in 2019, while miscellaneous nonbuilding fell 19%. Highway and bridge starts were down 8% for the year.

Nonresidential building dropped 20 percent from November to December to a seasonally adjusted annual rate of $289.5 billion. The main reason for the decline in December was a 93 percent decline in manufacturing after a large petrochemical plant broke ground in November. Institutional starts rose 6 percent over the month fueled by gains in healthcare and recreation. Commercial starts rose 5 percent in December due to solid gains in warehouses and parking structures. The largest nonresidential building project to break ground in December was the $712 million National Geospatial Agency Headquarters in Saint Louis, Missouri. Also breaking ground in December was a $570 million medical center renovation in Bethesda, Maryland, and a $400 million consolidated rental car facility at Newark International Airport. 

Voice your opinion!

To join the conversation, and become an exclusive member of T&D World, create an account today!