Total US construction starts fell 4% in April to a seasonally adjusted annual rate of $1.04 trillion, according to Dodge Construction Network. Nonresidential starts led the drop as manufacturing fell 22% following a strong performance in March. Nonbuilding starts rose 7% to balance the decline, and residential building stats gained 12%.
On a year-to-date basis through April, total construction starts were 7% below the first four months of 2022. Residential starts were down 27%, and nonresidential and nonbuilding starts grew 7% and 16%, respectively. For the 12 months ending April 2023, total construction starts were 11% higher than the 12 months ending April 2022. Nonresidential and nonbuilding starts showed gains at 34% and 24%, respectively; however, residential starts hindered overall growth with a 13% decline on a 12-month rolling basis.
“The construction sector continues to sweep its economic worries under the rug, even with inflation, unstable banking, and the potential breach of the US debt ceiling,” said Richard Branch, chief economist for Dodge Construction Network. “While the presence of, or lack thereof, large manufacturing projects each month has made the data more volatile, the underlying trends point to a very healthy sector. However, this is likely transitory. The Dodge Momentum Index, which tracks projects entering the earliest planning stages, is falling, which should lead to weaker starts in the second half of the year – especially for the private sector.”
Nonbuilding construction started to improve by 7% in April to a seasonally adjusted annual rate of $281bn. The utility/gas plant category had the largest gain in the month, rising 76%, with a small increase in street and bridge starts at 5%. Miscellaneous nonbuilding starts fell 16%, and environmental public works lost 17%. Year-to-date through April, nonbuilding starts gained 16%. Utility/gas plants rose 37%, and miscellaneous nonbuilding starts were up 36%. Environmental public works rose by 10%, and highway and bridge starts gained 9%.
For the 12 months ending April 2023, total nonbuilding starts were 24% higher than the 12 months ending April 2022, with significant gains across each sector. Utility/gas plant starts rose 43%, miscellaneous nonbuilding starts were 27% higher, highway and bridge starts were up 20%, and environmental public works rose 17% on a 12-month rolling sum basis.
The largest nonbuilding projects to break ground in April were the $750 million Magnolia Power/Kindle Energy generating station in Plaquemine, Louisiana, the $738 million Rock Creek wind farm in Laramie, Wyoming, and the $542 million Eagle LNG export facility in Jacksonville, Florida.
Nonresidential building starts declined 22% in April to a seasonally adjusted annual rate of $383bn. This sharp decline followed an equally large March when numerous large manufacturing plants took off. In April, manufacturing starts lost a staggering 68%. Institutional starts dropped 13%, largely due to a pullback in healthcare construction, while commercial starts improved by 5% thanks to an increase in retail and office construction. Institutional starts gained 14%, manufacturing starts were 4% higher, and commercial starts were up 2%. Year-over-year, from January 2023 through April 2023, total nonresidential starts were 7% higher than in the first four months of 2022.