Reed Construction Data announced last month that the value of January construction starts, excluding residential contracts, fell 15.3% after also declining 13.3% in December. This year’s kick-off dollar volume, $18.6 billion, was the lowest since February 2013’s $16.4 billion.
“Abnormal amounts of snow and ice and continuing hesitancy in the overall economy have held back spending plans early in 2014,” said Alex Carrick, Chief Economist, Reed Construction Data Canada. “Companies have been making good profits, as reflected in stock market valuations, but decision-makers have been waiting for more stability in Washington and signs of a better global economy before committing to construction projects. The first has been achieved to a significant degree; the second will be a matter of more time.”
In the five years prior to the latest reading, the average January versus December percentage change was -2.0%, ranging from +17.0% in 2010 to -11.3% in 2013. Starts this January were down -6.4% versus the opening month of last year. Difficult winter weather so far this year has held back starts in many regions, especially in middle and eastern-America. Also, many of the latest statistics on the U.S. economy—including housing starts—have suffered setbacks. Recent month-over-month total employment gains have been less than hoped for, although the number of on-site construction workers in January jumped by 48,000. The jobless rate in the sector, however, remains uncomfortably high at 12.3%.
Among the four major type-of-structure categories, commercial starts performed best month to month (+1.9%) in January. The two largest subcategories within commercial both recorded increases in the latest month versus December of last year, with retail +9.6% and private office buildings +11.2%. Compared with January 2013, the percentage changes are not as favorable, except for private office buildings, which were +184.1%, or nearly three times as great. Retail starts in January 2014 over January 2013 were -65.1%, and the total commercial grouping was
Manufacturing starts this January were -72.7% versus the final month of 2013 and were -41.9% when compared with January of last year. In dollar volume, December was the strongest month last year for this construction category, with October a close runner-up. The other 10 months of 2013 averaged about the same as January of this year.
Institutional starts, which were -15.1% month to month in January, were pulled down by their largest subcategory—i.e., more than 50% of the total—schools and colleges at -22.1%, with retail at +9.6% and private office buildings at +11.2%. Compared with January of 2013, the percentage changes are not as favorable, with the exception of private offices. That helped counter-balance a 29.0% year-over-year decline in school work, so that the year-over-year decline in total institutional was a relatively modest -4.0%.