Dive Brief:
- September nonresidential construction starts were $15 billion, a drop of 26.1% versus August and -41.8% versus September of last year, making this the worst September figure in the past decade, according to a CMD Group report.
- CMD attributes a large part of the overall decline to a major slowdown in the heavy engineering category (-58.9%), specifically road and highway work (-89.3%), although water/sewer (-82.58%) and bridge (-68.6%) contributed to heavy engineering’s negative number.
- Commercial (-20.1%) and institutional (-16.8%) drops were not as severe, helped along by nursing/assisted living (+30.9%), police/courthouse/prison (+26.6%) and retail (+69.6%).
Dive Insight:
The year-to-date number for the troubled category of road/highway is only -14.6%, but CMD points out that over the last two months it’s dropped by more than half and now has almost come to a standstill. CMD chalks this up to uncertainty from Washington about the future availability of funds for these projects.
Another downward trend, while not quite as severe as road/highway, is that of the commercial category’s private office component, down -59.7% from August and -69% year-over-year. The institutional category’s nursing/assisted living and police/courthouse/prison components, as well as commercial’s retail segment, however, are undisputed winners with strong year-to-date, year-over-year and month-over-month growth.
As we head into the winter months, when road/highway work traditionally drops because of the weather, analysts will be watching closely for signs of life from the institutional and commercial categories to prevent nonresidential starts from falling further.
