March new construction dips slightly, McGraw-Hill reports
NEW YORK - New construction starts in March slipped 1 percent to a seasonally adjusted annual rate of $475.2 billion, it was reported by McGraw-Hill Construction Dodge.
Both nonresidential building and housing fell slightly, while non-building construction made a partial rebound from a weak February.
The construction start data for March produced a 143 rating for the Dodge Index (1996 data represents the baseline value of 100), compared to a revised 145 for February and 150 for January. Accordingly, the recent trend for the Dodge Index has been downward, with the first quarter of 2003 averaging 3 percent less than the previous quarter.
"Last year the construction industry leveled off, and the early results for 2003 are now pointing towards a mild loss of momentum," said Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction Dodge.
"Single-family housing has held up quite well, thanks to low mortgage rates, but other construction sectors have been dampened by the lackluster economy, the diminished fiscal health of the federal and state governments, and uncertainty related to the buildup towards war against Iraq.
"The quick end to hostilities has lifted some of the uncertainty, but it may take some time before the economy strengthens in a sustained manner, and it will be even longer before the federal and state governments see improvement in their fiscal positions. The first quarter provides a good indication of how the year as a whole will play out," Murray said.
Nonresidential building in March dropped 1 percent to $140.8 billion. After registering growth in February, the commercial categories slipped back once again in March: stores, down 12 percent; hotels, down 16 percent; offices, down 24 percent; and warehouses, down 36 percent.
Commercial construction"The commercial categories in recent months have shown an up-and-down pattern, so the March retreat following February's upswing is consistent with that trend," stated Murray. "The commercial categories now appear to be hovering at a decreased volume, which is likely to persist for at least a few more quarters."
Although down from its February pace, hotel construction in March did include the start of a $143 million hotel-casino project in Las Vegas. The long-depressed manufacturing plant category was able to report a 10 percent gain in March.
The institutional side of the nonresidential market offset much of the March weakness for commercial building. The education-building category grew 5 percent, supported by the start of a $120 million bioengineering laboratory building at the University of California, Berkeley, plus the start of an $88 million library in Jacksonville, Fla.
Health-care facilities in March climbed 23 percent, while the public building category jumped 47 percent. Transportation terminal work was up 96 percent. Two institutional categories that lost momentum in March were churches, down 1 percent; and amusement-related projects, down 7 percent.
Residential building, at $247.5 billion, was down 2 percent in March. The slight drop was the result of a 3 percent decrease for single-family housing combined with a 2 percent gain for multifamily housing. The level for single-family housing was still very healthy, matching the average monthly pace reported in 2002.
By geography, residential building in March performed as follows: the South Central, up 6 percent; the Northeast, down 1 percent; the South Atlantic, down 3 percent; the West, down 4 percent; and the Midwest, down 5 percent.