New construction starts retreated 3% in December to a seasonally adjusted annual rate of $490.5 billion, according to McGraw-Hill Construction Dodge, a division of the McGraw-Hill Cos. Both nonresidential and residential building were essentially steady, but nonbuilding construction (public works and electric utilities) fell sharply from the heightened contracting in November. For all of 2002, total construction advanced 1% to $498.7 billion. The modest gain follows growth of 5% in 2001 and 6% in 2000.
The latest month's data produced a 148 reading for the Dodge Index, compared to a revised 152 in November. The Dodge Index averaged 150 in 2002, up slightly from the 149 reported for 2001.
"Total construction in 2002 essentially stabilized close to its 2001 level, as contracting continued to decelerate from the brisk pace of expansion several years ago," said Robert Murray, vice president of economic affairs for McGraw-Hill Construction Dodge. "While the rate of growth has diminished, the overall level of construction had held up reasonably well against the backdrop of the 2001 recession and the economy's fragile recovery in 2002. The greater fiscal stress now being experienced by the federal and state governments is likely to dampen institutional building and public works to some extent in 2003."
Nonbuilding construction in December 2002 fell 13%. Reduced contracting was reported for highways (down 2%) and bridges (down 6%). For the year, nonbuilding construction dropped 7% to $100.2 billion. Highways and bridges, however, edged up 1%.
