Institutional, heavy engineering sectors bring nonresidential starts down 2% in August

Dive Brief:

The value of nonresidential construction starts dropped 2% to $33.8 billion in August, down from July's upward-revised figure of $34.5 billion but still less than the usual seasonal decline of 3.5%, according to ConstructConnect. Starts were up 11.4% year over year, and 12.3% since January.
From July to August of 2016, the institutional (-17.5%) and heavy engineering (-8.8%) categories weighed down commercial's (28.8%) and industrial's (9.9%) positive performances, resulting in August's negative number. Compared to the year-ago period, heavy engineering (-12.9%) was the sole loser in August, with commercial (61.7%) experiencing significant growth.
Year to date, the commercial (22.5%) and institutional (17.5%) categories led the pack, with industrial coming in with an unsatisfactory decline (-42.4%).

Dive Insight:

As winter approaches, the construction industry can expect small seasonal declines in starts, according to ConstructConnect, which notes that its starts reports are not seasonally adjusted or altered for inflation.

Year over year, jobs in architectural and engineering services were up 2.4%, on par with July's figures and 7,000 short of the industry's peak of 1.453 million in February 2008. ConstructConnect also reported that the construction industry lost 6,000 jobs in August, which brings year-to-date average monthly job gains down to 43,000 – 5,000 per month – a stark contrast to last year's January-to-August gains of 140,000 payroll positions, or 18,000 per month. Year-over-year construction industry employment (31%), however, is still outpacing that of the general economy (1.7%).

Florida grabbed three of ConstructConnect's 10 largest project starts in August, while Illinois claimed two. The top six projects, based on dollar value, were: the Florida Mall Interior Renovations, in Orlando, FL, ($400 million); the Criminal Justice Center Complex, in Nashville, FL ($113 million); Deering Groves, in Homestead, FL ($100 million); the Creighton University Dental Clinic, in Omaha, NE ($82 million); the North Dorchester Replacement High School, in Hurlock, MD ($50 million); and the Joliet Multi Modal Transportation Center Train Station 3A, in Joliet, IL ($42 million).

Last month, Dodge Data & Analytics reported that the value of July construction starts fell 2% to a seasonally adjusted annual rate of $586.3 billion, propelled by a 56% dive in the electric utilities sector. In August, however, the Dodge Momentum Index, which predicts future construction activity, was on the upswing (1.3%) due to modest increases in institutional (1.7%) and commercial (1%) project planning. The August reading was the fifth-straight increase for the index. In addition, earlier this month, the Commerce Department reported that July nonresidential spending reached an all-time high of $429.5 billion (seasonally adjusted), a result of increased office and shopping center construction.