Contracting for new construction in July dropped 8% to a seasonally adjusted annual rate of $467.9 billion, according to the Dodge Division of McGraw-Hill Construction.
The loss of momentum was present across a wide range of project types: public works, nonresidential building, and single-family housing. Despite the weak July, total construction activity during the first seven months of 2002 was essentially even with the same period a year ago.
"The volume of new construction in July was at the low end of this year's range, but it's still consistent with the sense that total construction activity in 2002 is hovering around last year's average pace," said Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction.
Nonresidential building, at $140.5 billion, was down 10% in July. The commercial categories generally saw weaker contracting: offices, down 22%; hotels, down 7%; stores, down 2%; and warehouses, down 1%.
According to Murray, "After a lengthy decline, office construction had appeared to be stabilizing at a reduced volume, but July's downturn shows that retrenchment is still in progress. Rising office vacancies and uncertainty about the tenuous economic recovery continue to dampen prospects for a construction rebound."
Manufacturing plant construction in July dropped 38%, as this project type remains depressed.
Residential building in July dropped 3% to $231.6 billion. Single-family housing posted a 4% decline, while the smaller multifamily category advanced 3%.
Even with its decline, single-family housing continues to be very strong, as contracting in July stayed 7% above the average pace registered in 2001.
"Single-family housing has shown some signs of settling back in recent months, but so far the retreat has been very modest," Murray said.
"Home buyer demand remains very strong, as depicted by the record pace for new home sales in July, and low mortgage rates continue to outweigh the negatives of diminished consumer confidence and sluggish employment conditions.
By region, the Northeast was up 1%, the Midwest and South Central were both unchanged, the south Atlantic was down 4%, and the West was down 6%.