At a seasonally adjusted annual rate of $540.6 billion, new construction starts in August dropped 9%, according to McGraw Hill Construction. The decline followed July’s elevated volume, the strongest so far in 2014, and brought activity back to the average pace reported during the first seven months of this year. By major sector, nonresidential building fell sharply, after being lifted in July by the start of several large manufacturing plant projects, while nonbuilding construction (public works and electric utilities) also retreated. Residential building in August ran counter by posting a modest gain, helped by the continued growth for multifamily housing. Through the first eight months of 2014, total construction starts on an unadjusted basis were $361.4 billion, up 4% from the same period a year ago.
The August statistics lowered the Dodge Index to 114 (2000=100), compared to a revised 126 for July. “The broad trend for construction activity remains upward, but on a month-to-month basis there are still the occasional setbacks,” said Robert Murray, chief economist for McGraw Hill Construction, in a press release. “Nonresidential building over the past two months was boosted by the start of several unusually large energy-related manufacturing projects, so the pullback in August was not unexpected. The commercial side of nonresidential building continues to see moderate growth, and there’s now further evidence that the institutional structure types have at least stabilized after a lengthy five-year decline.
“While public works construction is now settling back, the August passage of the $10.8 billion patch to the Highway Trust Fund should help to keep the slide from getting too severe. Residential building continues to be supported by the ongoing strength shown by multi-family housing. However, this year’s pause for single family housing has emerged as an area of concern, limiting the growth that’s being reported for total construction activity.”
Big projects that broke ground last month include:
- $3 billion petrochemical plant and a $1.7 billion ethylene plant, both located in Texas
- $800 million clinical medical facility and an $800 million ambulatory care center in New York
- $500 million polyethylene plant expansion in Texas
- $375 million office building in Milwaukee
- $200 million hotel in Washington D.C.
- $157 million retail portion of the $957 million Nordstrom Tower, a massive residential/retail/hotel mixed use high-rise in New York
- $175 million office tower in Bellevue, Wash.