August Construction Starts Fall 9 Percent

The value of new construction starts in August decreased 9 percent from the previous month to a seasonally adjusted annual rate of $741.9 billion, according to Dodge Data & Analytics. The August downturn for total construction starts matched the 9-percent decline reported for July, as activity in the latest two months pulled back after the sharp increases in May (up 14 percent) and June (up 10 percent).

By major sector, weaker activity was reported in August for nonresidential building, down 19 percent; and residential building, down 7 percent. On the plus side, nonbuilding construction in August advanced 6 percent. During the first eight months of 2018, total construction starts on an unadjusted basis were $540.0 billion, up 1 percent from a year ago. The year-to-date performance for total construction was restrained by a 45-percent drop for the electric utility/gas plant category. If the electric utility/gas plant category is excluded, total construction starts in this year’s first eight months would be up 4 percent compared to the same period of 2017.

Nonresidential building in August fell 19 percent to $255.2 billion (annual rate), which followed a 22-percent decline in July from an unsustainably high June amount.

“The pace of construction starts weakened substantially in August, but remained within the range of activity witnessed so far in 2018, admittedly at the low end,” says Robert A. Murray, chief economist for Dodge Data & Analytics.