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.