March Construction Down 1 Percent
New construction starts in March slipped 1 percent to a seasonally adjusted annual rate of $475.2 billion, according to McGraw-Hill Construction Dodge, a division of the McGraw-Hill Companies. Nonresidential building and housing fell slightly, while nonbuilding construction made a partial rebound from a weak February.
Nonresidetial buildng in March dropped 1 percent to $140.8 billion. After registering growth in February, the commercial categories slipped in March – stores were down 12 percent, hotels 16 percent, offices 24 percent and warehouses 36 percent.
“The commercial categories in recent months have shown an up-and-down pattern, so the March retreat following February’s upswing is consistent with that trend,” said Robert Murray, vice president of economic affairs for McGraw-Hill Construction Dodge. Murray added that single family housing has held up well because of low mortgage rates, but that other construction sectors have been dampened by a lackluster economy, the diminished fiscal health of federal and state governments, and uncertainty related to the buildup towards war against Iraq.
“The quick end to hostilities has lifted some of the uncertainty, but it may take some time before the economy strengthens in a sustained manner,” Murray added. “It will be even longer before the federal and state governments see improvement in their fiscal positions. In this environment, the moderate slowdown experienced by construction during the first quarter provides a good indication of how the year as a whole will play out.”
Nonbuilding construction in March jumped 3 percent to $87.0 billion. The volume of new highway starts was especially strong, rising 26 percent from February. Congress finalized fiscal 2003 appropriations in early February, keeping funding for the federal-aid highway program within 1 percent of 2002, and this helped highway construction to rebound in March.
During the first quarter of 2003, total construction on an unadjusted basis was 7 percent below the same period in 2002. On a regional basis, total construction in the first quarter was up 6 percent in the West, and down 3 percent in the South Central; the South Atlantic down 8 percent; the Midwest down 12 percent and the Northeast down 27 percent.