Construction Starts Show Additional Gains in June

Total construction starts increased 6 percent in June to a seasonally adjusted annual rate of $641.4 billion, according to Dodge Data & Analytics. This marks the second consecutive monthly gain in construction starts following the COVID-19 induced declines in March and April. In June, nonresidential building starts gained 6 percent.

Through the first six months of the year, starts were down 14 percent from the same period in 2019. Nonresidential starts fell 22 percent. For the 12 months ending in June 2020, total construction starts were down 2 percent from the previous 12 months. Nonresidential building starts were down 7 percent In June, the Dodge Index moved 6 percent higher to 136 (2000=100) from the 128 reading in May. Compared to a year earlier, the Dodge Index was down 28 percent.

“Construction starts activity remains significantly weaker than year-ago levels, even though it has been slowly increasing since its nadir in April,” says Richard Branch, chief economist for Dodge Data & Analytics. “May’s gain in starts was fueled by a handful of very large projects, but June’s gain appears to be much more organic in nature. Construction starts should continue to post modest gains in the months to come as the economy continues to recover from the shortest and steepest recession in U.S. history. However, the recent acceleration in new COVID-19 cases in states such as Texas, Florida, and California is a significant downside risk to the economy and the construction industry’s growth trajectory.”

Nonresidential building starts moved 6 percent higher in June to a seasonally adjusted annual rate of $198.5 billion. Institutional building starts rose 15 percent during the month, while commercial building starts moved 4 percent higher.

On a year-to-date basis, total nonresidential building starts were 22 percent lower than the first six months of 2019. Institutional building starts were down 15 percent, while commercial starts were 27 percent lower. On a 12-month total basis, total nonresidential building starts were 7 percent lower than the 12 months ending June 2019. Commercial starts have dropped 8 percent, while institutional starts were down 9 percent.