The value of new construction starts in January settled back 3% to a seasonally adjusted annual rate of $522.1 billion, according to McGraw-Hill Construction, a division of The McGraw-Hill Cos. Residential building held steady with its elevated pace in December, but declines were reported for nonresidential building and public works.
The latest month's data lowered the Dodge Index to 157, down from an upwardly revised 163 for December. Since reaching its most recent peak at 166 in October, the Dodge Index has retreated for three months in a row, returning to the 157 mark that was the average for all of 2003.
"The pattern in January was essentially a continuation of what was present during 2003--a strong performance by housing, but also weaker activity for nonresidential building and public works," stated Robert Murray, vice president of economic affairs for McGraw-Hill Construction. "As the current year proceeds, it's expected that this pattern will begin to shift, with a mild slowdown for housing being balanced by some improvement for commercial building. At the same time, the publicly financed parts of the construction industry--institutional building and public works--will continue to be constrained by the difficult fiscal conditions facing the federal and state governments."
Nonbuilding construction, at $79.9 billion, fell 16% in January. Reduced contracting was reported throughout the public works sector, including a 23% drop for new highway starts and a 49% plunge for bridge construction.
"The public works sector occasionally shows volatility on a month-by-month basis, so it's expected that contracting will rebound in the coming months," said Murray.
