NEW YORK (BUSINESS WIRE) — New construction starts in October climbed 21 percent to a seasonally adjusted annual rate of $864 billion, according to Dodge Data & Analytics.
The substantial increase followed three straight months of decline, during which the pace of total construction starts fell 22 percent from the exceptionally strong volume reported in June.
Nonresidential building in October surged 53 percent, as several large projects lifted the manufacturing plant, office building and transportation terminal categories.
Non-building construction in October advanced 14 percent, supported by growth for public works while the electric utility/gas plant category bounced back from depressed activity in September.
Residential building in October edged up a slight 2 percent, helped by improvement for multifamily housing.
During the first 10 months of 2018, total construction starts on an unadjusted basis were $679.1 billion across the U.S., up 1 percent from the same period a year ago.
The year-to-date gain for total construction starts was restrained by a 45 percent slide for the electric utility/gas plant category. If the electric utility/gas plant category is excluded, total construction starts during the first 10 months of 2018 would be up 3 percent relative to the same period a year ago.
“During 2018, the presence of very large projects in a given month has played a considerable role in shaping the monthly pattern of activity, and in October it was nonresidential building that especially benefitted from the start of very large projects,” said Robert A. Murray, chief economist for Dodge Data & Analytics. “These included a $2.4 billion petrochemical plant in Texas, the $1.4 billion Terminal One building at Newark Liberty International Airport, the $860 million expansion to the Las Vegas Convention Center, a $750 million Facebook data center in Utah, and a $655 million concourse expansion at Denver International Airport that’s part of that facility’s extensive upgrade.
“Earlier, decreasing construction starts for nonresidential building during this year’s third quarter raised some concern, suggesting that this sector may have already peaked and is now in decline,” Murray added. “The strong October performance indicates that nonresidential building construction starts continue to proceed at an elevated pace, at least for the present.”
Nonresidential building in October was $358.3 billion (annual rate), up 53 percent from September’s lackluster amount. After registering heightened activity in June, nonresidential building retreated for three consecutive months before October’s upturn.
Manufacturing plant construction in October jumped 189 percent, while commercial building structure types as a group increased 48 percent in October, strengthening after declines during the previous three months.
New office construction starts in October climbed 123 percent, as nine office projects across the U.S. valued at $100 million or more that reached groundbreaking in October.
Hotel construction in October advanced 59 percent and warehouse construction in October grew 17 percent.
There were two commercial structure types that registered declines in October — commercial garages, down 5 percent; and store construction, down 16 percent.
The public works categories as a group rose 6 percent in October, with a varied performance by individual category. Highway and bridge construction starts climbed 26 percent, with October coming in as the highest seasonally adjusted monthly amount so far in 2018.
Residential building in October was $321.7 billion (annual rate), rising 2 percent. The lift came from multifamily housing, which increased 15 percent in October. Single family housing in October decreased 4 percent, as affordability constraints continue to make it difficult for this project type to register any sustained upward movement during 2018.