At a seasonally adjusted rate of $512.9 billion, new construction starts in July slipped 4% from a very strong June, according to McGraw-Hill Construction Dodge, a division of The McGraw-Hill Cos. Both nonresidential building and housing were down slightly, while a more substantial decline was reported for nonbuilding construction (public works and electric utilities). Through the first seven months of 2003, total construction activity was 1% below the same period a year ago.
July's data produced a 154 reading for the Dodge Index compared to a revised 160 for June. During the first five months of 2003, the Dodge Index averaged 148.
"The construction industry got off to a sluggish start in 2003, and more recently it has picked up the pace," stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction Dodge. "The modest retreat in July was expected, since June was helped by projects that had been previously deferred. July still qualifies as the second strongest month so far in 2003, and it has helped the 2003 year-to-date figures narrow the gap with 2002. At the same time, the construction industry going forward continues to face several constraints--high vacancy rates for commercial properties, plus the sharply diminished fiscal health of the federal and state governments."
Nonbuilding in July dropped 15% to $90.2 billion. This followed a 29% increase in June, which featured widespread gains as projects that had been held back earlier in the year reached the construction start stage. The pace for nonbuilding construction in July was still 6% above the average for the January-May period. The public works sector showed these July declines by major category--highways were down 25% and bridgework declined 19%.