According to Dodge Data & Analytics, construction starts in September fell nationally by about 5% compared to the previous month. In July and August, the pace had slowed by 9% for two months in a row. However, there is good news in what may seem like a bad forecast at first glance.
Robert Murray, Chief Economist at Dodge, reports that the construction starts in May and June rose to unsustainably high levels after rising steadily for the first half of 2018, so the slide in the following months could be a correction to a more sustainable level of growth.
Activity is looking good compared to last year, with a caveat.
The total volume of construction starts through the first nine months of 2018 was about $599.9 billion, which is a 1% decrease from the same time last year. However, a 49% dive in utility sector construction really put a damper on that number. According to Dodge, excluding that sector, construction starts are actually up by 1% for this year compared to last.
Moderately sunny forecast
While some areas, especially the utilities, experienced a pull back, residential construction grew by 2%. By area the South Central and South Atlantic regions both experienced strong growth of 12% and 6% respectively in September, possibly due to reconstruction after the recent storms.
Although rising interest rates and higher costs in materials are definitely putting the squeeze on the industry overall, strong economic growth, an easing of some banking standards, and healthy market environments for commercial real estate have kept the industry moving forward, according to Dodge.
This means that although some sectors and regions are experiencing some slowing, the forecast is still good, and for now the market experts at Dodge are not predicting a decline overall in construction.
What do the big numbers mean locally?
While the national trends in construction starts don’t always translate directly to what is happening in our local markets of El Paso and Phoenix, keeping an eye on the health of the whole industry keeps us in touch with broader trends so we can plan for the future.
Locally in El Paso, there are a variety of public works projects on the table, and Diversified continues to be busy with schools, retail, and large healthcare projects. In Phoenix, multi-family construction and hospitality continue to show growth which is good for Diversified in that market.
At Diversified Interiors, we are watching the trends to make sure we can serve our customers best by planning ahead for future growth. By staying on top of our industry, we provide consistency and reliability on every job — which is just what our customers can expect from us.
Speak to one of our team members about your next project by calling 915-585-0030 in El Paso or 480-961-5930 or contact us here. We look forward to working with you.
to read more from the Dodge Analytics report.