Total construction starts lost 1 percent from January to February dropping to a seasonally adjusted annual rate of $767.5 billion, according to Dodge Data & Analytics. Large projects in the office and healthcare sectors provided a boost for overall nonresidential building.
With only two months of data available for 2020, it is difficult to ascribe a 2020 trend, say Dodge analysts. However, some perspective can be gleaned by examining a 12-month moving total. For the 12 months ending February 2020, total construction starts were 3 percent higher than the previous twelve-month period. By major category, nonresidential building starts were 3 percent higher.
In February, the Dodge Index moved lower to 162 (2000=100) compared to the 165 posted in January.
“The good news is that heading into the coronavirus pandemic, construction starts were stable. The economy was healthy fueled by continued steady job growth,” says Richard Branch, chief economist of Dodge Data and Analytics. “Of course, the pandemic’s effect on future starts is as yet unknown. Construction firms will need to deal with multiple issues including supply chain disruptions, workforce constrictions due to the outbreak, and an economy that has moved from a pace near its long-term potential to a virtual stall within the space of a week. Over the next few months, many construction projects could see delays in start or longer times to completion based on shortages of supplies from China or a reduction in available labor due to spread of the virus. Still others may begin to see projects cancelled outright due to a sudden circumstantial change in demand. Planning data as reported to Dodge Data & Analytics will be watched closely to see if fissures are developing in the construction sector.”
Nonresidential building gained 7 percent in the month of February to $285.9 billion on the back of several large projects getting underway in the office and healthcare sectors. February’s commercial construction starts rose 7 percent, while institutional starts moved 13 percent higher.
