New construction starts in March climbed 8% to a seasonally adjusted annual rate of $475.7 billion, it was reported by McGraw-Hill Construction, a division of the McGraw-Hill Cos. The gain for total construction in March followed two months of decline and was led by a strong increase for the non-building construction sector (public works and electric utilities).
At the same time, March witnessed slightly reduced activity for both housing and nonresidential building. During the first three months of 2013, total construction starts on an unadjusted basis came in at $100.5 billion, unchanged from the same period a year ago.
The latest month’s data lifted the Dodge Index to 101 (2000=100), up from a revised 93 for February, and essentially the same as the average rate for the index during 2012.
“After the slowdown in early 2013, the March improvement for total construction is in line with what’s been seen over the past year—that being, an up-and-down pattern around a gradual rising trend,” said Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. “The support for total construction in March came from public works and electric utilities, which bounced back from a particularly weak February. Still, both segments are not expected to register much growth for 2013 as a whole, as public works construction is facing federal budget constraints, while electric utility construction is pulling back from the record high achieved in 2012.
"Residential building in March paused from its steady increases over the past year, with growth likely to resume in coming months. The modest decline for non-residential building in March was consistent with its struggle to establish upward momentum, as the gains for commercial building stay tenuous while institutional building remains in the process of bottoming out.”
Non-building construction in March jumped 42% to $139.9 billion (annual rate). Electric utility construction in March advanced 122% from its depressed February amount, helped especially by the start of a $940-million solar farm in Texas, in combination with such smaller-scale projects as a $90-million, biomass-to-energy power plant in Hawaii.
The volume of electric utility construction in March was still low by 2012 standards, down 64% from last year’s average monthly pace. The public-works categories overall in March were up 36%, rebounding after a 25% decline in February. Water supply construction surged 111%, reflecting the start of six water-main-replacement projects in Chicago totaling $506 million, as well as the start of a $125-million water treatment plant in Colorado.
The miscellaneous public-works category, which includes such diverse project types as pipelines and rail work, climbed 106% in March. Helping to boost the miscellaneous public-works total were such projects as a $710-million natural gas pipeline in Texas and Oklahoma, a $360-- million subway upgrade in New York City.
Highway and bridge construction in March increased 28%, strengthening after a weak February, with the help of a $488-million highway project in California, a $188-million bridge replacement project in Minnesota and a $125-million bridge replacement project in Missouri.
Murray said, “The federal-aid highway program was largely exempt from the impact of the sequester, and the start of several major projects in 2013 should make it possible for highway and bridge construction to register a full year gain.”
Two public works categories experienced declines for March – sewer systems, down 14%; and river/harbor development, down 16%.
Residential building, at $199.6 billion (annual rate), slipped 1% in March. Multifamily housing pulled back 2% after a strong February, which still kept the level of construction for this category 20% above its average monthly pace reported during 2012. Large multifamily projects that reached groundbreaking in March included a $192-million apartment complex in Long Island City, N.Y., the $125-million condominium portion of a $210-million hotel/condominium tower in Chicago, and an $83-million apartment tower in Los Angeles.
Through the first three months of 2013, the top metropolitan area in terms of the dollar amount of new multifamily starts was New York City, followed by Austin, Dallas-Ft. Worth, Miami and Washington, D.C. Single-family housing in March held steady with its February volume, while maintaining a 22% lead over its average monthly pace reported during 2012. The regional pattern for single-family housing in March showed gains for the Northeast, up 7%; and the West, up 2%; but declines for the South Central, down 1%; the South Atlantic, down 2%; and the Midwest, down 4%.