CMD: October starts see slight 'pullback' in line with seasonal slowdown

Dive Brief:

The value of October nonresidential construction starts was $24.6 billion, a drop of 2.5% compared with September and a decline of 3.4% compared with October of last year — a rate that is close to the normal seasonal slowdown rate of -4%, according to a CMD Group report.
Both the commercial (2.5%) and institutional (2.1%) categories were up slightly month-to-month; however, the drop in heavy engineering (-6.7%) erased those gains. On a month-to-month basis, industrial was down -71%, but CMD noted this category is highly volatile depending on the status of just one or two megaprojects. Year-to-date institutional (-4.9%) and commercial (-1.2%) starts were down, but industrial was up 48.3%.
Road/highway, the largest segment (representing 40%) of the heavy engineering category was down -8.7% from last month and -3.5% from last year, but up 11.3% year-to-date compared with the same period from last year. The heavy engineering category as a whole was up 15% year-to-date from last year and outperformed the other major categories.

Dive Insight:

Year-to-date starts in 2015 compared with the same time period in 2014 were up 5.2%. Starts this year have averaged $27 billion per month in comparison with an average of $25.6 billion for the January-October time period last year.

The trend in all nonresidential categories, according to CMD, was a relatively stable one, with the exception of heavy engineering, which arced higher. A positive sign was a month-over-month increase in architectural and engineering services of 0.6%, and a year-to-date increase of 3%. CMD usually interprets this number as a sign of projects in the planning stage.

Adding to the positive news, the Bureau of Labor Statistics (BLS) recorded a month-to-month jobs increase from September to October of 31,000 in the construction sector, resulting in a construction unemployment rate of 6.2%. Job increases are up 3.8% year over year, almost double the rate of all non-farm jobs. According to the BLS, average hourly earnings for construction rose from 2% to 2.6% and average weekly earnings accelerated from 1.0% to 4.1%.

The question of uncertainty from Washington regarding a highway bill affected the road/highway segment, but CMD said that new Speaker of the House Paul Ryan has spearheaded new measures for a stable "financial framework" through 2017.