Two reports on construction starts in January point in different directions. Total construction starts in current dollars (i.e., not inflation-adjusted) slumped 27% from December to January at a seasonally adjusted annual rate and 14% year-over-year (y/y), Dodge Construction Network reported on Tuesday. Nonresidential building starts decreased by 38% for the month and 2% y/y. “Manufacturing starts led the pullback in January, falling 91% following the start of several large projects in December. In January, commercial starts dropped 11% with office being the only category to post a gain, while institutional starts increased by 3% thanks to a large gain in education starts.” Nonbuilding starts declined 16% for the month but increased 10% y/y, with utility/gas starts down 76% for the month, miscellaneous up 17%, highway and bridge up 1%, and environmental public works up 22%. Residential starts tumbled 20% and 34%, respectively, with single-family down 5% for the month and multifamily down 37%.
The value of construction starts in current dollars climbed 25% y/y in January, data firm ConstructConnect reported on Thursday. “January was another month with an extraordinary wealth of mega-sized project initiations (i.e., projects carrying estimated values of a billion dollars or more each).” Nonresidential building starts jumped 94% y/y, with the largest component—industrial (manufacturing)—starts up 440%, institutional starts up 81%, and commercial starts down 10%. Engineering (civil) starts soared 31% y/y, with roads up 67%, water/sewage up 25%, bridges up 17%, power and miscellaneous civil down 23%, airports up 170%, and dams/marine down 26%. Residential starts plummeted 26% y/y, with single-family down 29% and apartments down 20%.
The Architecture Billings Index (ABI) registered a score of 49.3 in January, up from 48.4 in December but the fourth-straight reading below 50, the American Institute of Architects (AIA) reported on Wednesday. (AIA made routine annual revisions to seasonal adjustment factors that changed some previous readings, with mainly upward changes in recent scores.) AIA calls the index “a leading economic indicator that leads nonresidential construction activity by approximately 9-12 months.” The ABI is derived from the share of responding architecture firms that report a gain in billings over the previous month less the share reporting a decline in billings, presented on a 0-to-100 scale. Any score below 50 means more firms reported decreased billings than increased billings. Readings for practice specialties (based on three-month averages) varied: mixed practice, 56.0 (up from 54.7 in December); institutional, 48.6 (up from 48.1); commercial/industrial, 46.8 (up from 46.6); and residential (mainly multifamily), 45.9 (down from 46.2). An index tracking new design contracts reached an eight-month high of 53.4, up from 50.0 in December, “signifying that this decline in billings may reverse in the coming months,” said AIA Chief Economist Kermit Baker.
“Concerns over the health of the office building industry have mounted throughout the pandemic,” the Wall Street Journal reported on Wednesday. “The weak return-to-office rate has led to soaring vacancy levels in many cities. Last year’s spike in interest rates increased the cost of buying and refinancing properties and squeezed property values….The growing number of distressed office buildings reflects a recognition by owners and lenders that the robust return to the office they had hoped for isn’t likely ever to materialize. The number of employees returning to the office rate has plateaued at around half the level it was before the pandemic, reflecting the popularity of remote and hybrid work policies.” The preference for remote work adds to the challenge contractors face in recruiting workers for jobsite craft, as well as office, jobs.
The Bureau of Labor Statistics on Thursday posted an annual report on workforce characteristics of persons with a disability. Of the 7.0 million such employed persons, 6.7% were employed in the construction industry (up from 6.6% out of 6.0 million such workers in 2021), compared to 7.5% of the 151.3 million workers with no disability (up from 7.4% of 146.6 million in 2021). In other words, the construction industry share of employed workers both with and without a disability edged up in 2021. By occupation, 4.7% of employed persons with a disability in 2022 worked in construction and extraction occupations, compared to 5.4% of workers with no disability.
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