According to Dodge Data & Analytics, total construction starts in the final month of 2019 dropped -21% from the previous month to a seasonally adjusted annual rate of $800.4 billion. The sharp decline was largely a response to hefty gains posted in November’s utility and manufacturing sectors.
When removing the influence of these two very volatile sectors, total construction starts only fell -3% in December. By major sector, nonresidential building starts fell -20% in December, while nonbuilding starts dropped -41%, and residential starts lost -4% over the month.
For the full year, total construction starts were essentially flat when compared to 2018 at $817.6 billion. In 2019, nonbuilding starts gained +7% due to large gains in utility starts, while nonresidential starts fell -1% and residential starts declined -3%. Removing the massive +112% gain in utility starts from the total would result in total construction declining -3% from the previous year.
“2019 will go down as one of the most volatile years for monthly construction starts due the lumpy nature of large projects,” said Richard Branch, chief economist, Dodge Data & Analytics, in a press release. “Looking beyond the influence of these massive projects, it’s evident that the uncertainty surrounding trade policy weighed on construction activity last year.”
Nonresidential building dropped -20% from November to December to a seasonally adjusted annual rate of $289.5 billion. The main reason for the decline in December was a -93% decline in manufacturing after a large petrochemical plant broke ground in November. Institutional starts rose +6% over the month fueled by gains in healthcare and recreation. Commercial starts rose +5% in December due to solid gains in warehouses and parking structures.
The largest nonresidential building project to break ground in December was the $712-million National Geospatial Agency Headquarters in St. Louis. Also breaking ground in December was a $570-million medical center renovation in Bethesda, MD, and a $400 million consolidated rental car facility at Newark International Airport.
Nonbuilding construction fell -41% in December to a seasonally adjusted annual rate of $171.4 billion following an extremely strong November, which saw the start of several large projects. Two large nonbuilding construction project to break ground in December were the $900-million Sagamore Wind Farm project in Roosevelt County, NM, and the $400-million Deuel Harvest Wind Farm in Clear Lake, SD.
For the full year of 2019, nonbuilding construction rose +7% thanks to a +112% gain in the electric utility/gas plant category. When removing that category from total nonbuilding, starts were down -8% for year.