At a seasonally adjusted annual rate of $549 billion, new construction starts in November were up 1% from October, according to McGraw-Hill Construction Dodge, a division of The McGraw-Hill Cos. Improved contracting was reported for nonresidential building and public works, outweighing a slight loss of momentum for residential building. During the first 11 months of 2003, total construction activity was up 3% compared to a year ago.
November's data lifted the Dodge Index to 165, up from October's 163 and matching the year's high achieved in June. The volume of new construction starts began 2003 on a sluggish note, with the Dodge Index averaging 149 during the first five months of the year. This was followed by a sharp increase to 165 in June, as projects that had been deferred earlier in the year reached the construction start stage. Activity then settled back briefly in July and August before a modest strengthening trend emerged in the fall.
"The construction industry has picked up the pace in recent months," said Robert Murray, vice president of economic affairs for McGraw-Hill Construction Dodge. "Moving into 2004, the continued improvement by such sectors as commercial building and transportation public works would help offset the modest retreat expected for single family housing."
Nonbuilding construction grew 11% in November. Highways and bridges provided much of the upward impetus, rising 25% after four straight months of subdued contracting. Notwithstanding the strong November, highways and bridges through the first 11 months of 2003 still trailed their 2002 amount by 4%.
"The 2003 decline for highway and bridge construction marks a change from the steady growth of the past four years," said Murray. "The prospects for 2004 are still uncertain. It appears that fiscal 2004 appropriations for the federal-aid highway program will receive a moderate increase, but tight state budgets will continue to have a restraining impact on new construction."
