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Pandemic #10 – June New Construction Starts

Construction Starts gain 5% in May, 6% in June. But let’s put that in perspective. Starts year-to-date through June are down 14% compared to same 6mo 2019. Starts in Q2 2020 are down 22% compared to Q1 2020.

Non-building construction starts rose 27% in June driven by 108% gain in utility/gas plants, 63% increase in miscellaneous non-building construction and 38% rise in environmental public works projects >> Dodge June 2020 Report New Construction Starts

Non-building infrastructure construction starts for the 1st half 2020 were down 14% even though June starts were up huge. But that is almost entirely due to Utilities/Power Plants, 40% of the total of non-building markets, down 40%.

Highway and Bridge represents almost 40% of non-building markets and starts are up 8% for the 1st half 2020 compared to same period 2019.

Public works, almost 20% of non-building markets, posted starts for 1st half 2020 down 20%.

Commercial (Comm/Rtl, Lodging, Offc) and Multifamily (Dodge multifamily includes Asst Liv Fac, Dorms, MF Housing, Housing Reno) construction starts are down 22% in 1st half 2020. This group represents 20% of total of all construction markets.

Institutional building construction starts (Educ, Hlthcr, Amuse/Rec) are down 15% in the 1st six months of 2020 compared to same period 2019.

Manufacturing starts are down 38% ytd 2020 compared to same period 2019.

Single family residential starts are down only 1% in 1st half 2020 from same period 2019. That market alone represents 20% of all construction.

Expect 2020 spending declines in Amuse/Rec, Lodging, Offc, Mnfg. Expect increases in CommRtl (it’s all in warehouses, stores are down), and most non-building markets.

Even with new construction starts down 10%-15%, cash flow patterns are still indicating nonresidential construction spending will be up in 2020. Greatest strength is in non-building work. A reduction in 2020 new construction starts will show the greatest impact in 2021.

 

Coming in August:

Aug 3 – Construction Spending Report for June, will include revisions to April and May, both expected to be revised down.

Aug 7 – July jobs report for the period June 14 through July 18.

Aug – Revised Construction Outlook to include Data through June spending, July jobs and June new construction starts.

 

Producer Price Index Year-to-date thru June 2020

7-14-20

Producer Price Index selected items year-to-date through June 2020. All values compare most recent June pricing to December 2019. Pricing represents 6-month change, not annualized change.

  • -2.5%  Inputs to new nonresidential construction
  • -0.9%  Inputs to new residential construction

 

  • +1.0%  Final demand construction
  • -0.4%  New Warehouse Bldg
  • +1.2% New School Bldg
  • +0.7% New Office Bldg
  • +1.4% New Industrial Bldg
  • +1.4% New Healthcare Bldg

 

  • New work on nonresidential buildings
  • +0.7% Concrete contractors
  • +1.8% Roofing contractors
  • +1.4% Electrical contractors
  • +1.2% Plumbing contractors

 

  • Selected Material Inputs
  • -42.0% #2 Diesel fuel
  • +2.7% Ready Mix Concrete
  • +1.3% Precast concrete products
  • +1.3% Flat Glass
  • +0.1% Gypsum products
  • +6.1% Lumber and Plywood
  • -5.7% Steel pipe and tube
  • -11.5% Aluminum mill shapes
  • +2.2% Fabricated structural metal
  • +10.3% Fabricated structural metal bar joists and reinforcing bars
  • +11.9% Fabricated structural metal for non-industrial buildings
  • -3.7% Fabricated structural metal for bridges
  • -2.2% Fabricated steel plate
  • +1.6% Iron and steel scrap

AGC’s Table of June 2020 PPI

AGC does not publish year-to-date values. The data in this post is the combined effect of comparing June to March and March to December.

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