At a seasonally adjusted annual rate of $535.6 billion new construction starts in February increased 4% relative to the previous month, according to a report compiled by McGraw-Hill Construction, a division of The McGraw-Hill Cos. Gains were registered by nonresidential building and housing, while the nonbuilding construction sector held steady with its January pace. During the first two months of 2004, total construction was 2% higher than the same period a year ago.
February's data lifted the Dodge Index to 161, up from a revised 155 for January. After reaching its most recent peak of 168 in October 2003, the Dodge Index experienced a mild loss of momentum over the next three months before rebound in February.
"The construction industry appears to be hovering at a level close to last year's pace," stated Robert Murray, vice president of economic affairs for McGraw-Hill Construction. "Over the course of 2004 it's expected that nonresidential building will see a modest strengthening trend. Admittedly, though, this year's sharp increase in steel prices has made the nonresidential upturn less certain, given the impact that higher costs and materials shortages may have on individual construction projects. At this juncture, it appears that the nonresidential upturn will be dampened but not derailed, assuming steel prices settle back by midyear."
Nonbuilding construction in February was reported at $78.3 billion, the same as the previous month. The public works categories in total bounced back 4% after a weak January, but they were offset by a sharp 61% decline for electric power plants. Highways and bridges in February were up 16%, helped by the start of several large bridge projects in such states as Virginia, North Carolina, Pennsylvania, Tennessee and Iowa.