New construction starts in March slipped 1% to a seasonally adjusted annual rate of $475.2 billion, according to McGraw-Hill Construction Dodge, a division of the McGraw-Hill Cos. Both nonresidential and housing fell slightly, while nonbuilding construction made a partial rebound from a weak February.
The construction start data for March produced a 143 reading for the Dodge Index compared to a revised 145 for February and 150 for January. Accordingly, the recent trend for the Dodge Index has been downward, with the first quarter of 2003 averaging 3% less than the previous quarter.
"Last year the construction industry leveled off, and the early results for 2003 are now pointing towards a mild loss of momentum," stated Robert Murray, vice president of economic affairs for McGraw-Hill Construction Dodge. "The quick end to hostilities (in Iraq) has lifted some of the uncertainty, but it may take some time before the economy strengthens in a sustained manner, and it will be even longer before the federal and state governments see improvement in their fiscal positions. In this environment, the moderate slowdown experienced by construction during the first quarter provides a good indication of how the year as a whole will play out."
Nonbuilding construction in March increased 3% to $87 billion. The volume of new highway starts was especially strong, rising 26% after the prior month's depressed amount. Congress finalized FY 2003 appropriations in early February, keeping funding for the federal-aid highway program within 1% of the previous year, and this apparently helped highway construction to rebound in March.