New construction starts in March retreated 13 percent from the previous month to a seasonally adjusted annual rate of $633.3 billion, according to Dodge Data & Analytics. The decline followed strong gains in January (up 9 percent) and February (up 17 percent), when construction was lifted by the start of several massive projects valued each in excess of $1 billion, including four liquefied natural gas (LNG) terminal projects, a petrochemical plant, and a solar power facility.
Year-to-date, construction starts are up by a large amount.
While the March statistics did include the start of a $2.3 billion highway project in Florida, the boost coming from projects in excess of $1 billion was substantially less than what occurred during the first two months of the year.
By major sector, March showed diminished activity for nonresidential building and nonbuilding construction, while residential building held steady. If projects in excess of $1 billion are excluded, the result for total construction starts would be a 4 percent gain in March on a seasonally adjusted basis relative to February, and an 11 percent gain for the first three months of 2015 on an unadjusted basis relative to the same period a year ago.
“The presence of unusually large projects will affect the month-to-month pattern for construction starts, and that’s certainly been true during the early months of 2015,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “The elevated activity in February exceeded the underlying trend for construction starts, and the March pullback returns activity to a more sustainable pace, at the same time showing an industry that’s still in the midst of expansion. While nonresidential building lost some momentum in March, the broad pattern over recent months reveals more growth for commercial building combined with strengthening for several institutional structure types, most notably school construction. Although there’s concern that public works construction will be dampened by the uncertainty caused by the soon-to-expire federal transportation legislation, a healthy amount of highway and bridge work has reached the construction start stage so far in 2015. And, while residential building still awaits renewed upward progress by single family housing, the multifamily side of the housing market continues to strengthen, as low vacancies and rising rents in numerous markets provide the justification for more construction.”