Total Construction Starts Soar in October
November 23, 2021
Total construction starts pushed 16 percent higher in October to a seasonally adjusted annual rate of $1.01 trillion, according to Dodge Construction Network. Nonresidential building starts gained 29 percent. The month’s large gains resulted from the start of three large projects: two massive manufacturing plants and an LNG export facility. Without these projects, total construction starts would have fallen 6 percent in October.
“Economic growth has resumed following the third quarter’s Delta-led slowdown. However, the construction sector’s grip on growth remains tenuous,” says Richard Branch, Chief Economist for Dodge Construction Network. “Long term, construction starts should improve, fed by an increase of nonresidential building projects in the planning pipeline and the recent passage of the infrastructure bill. Both will provide meaningful support and growth to construction in the year to come. This expectation, however, must be tempered by the significant challenges facing the industry: high prices, shortages of key materials, and the continued scarcity of skilled labor. While healing from the pandemic continues, there’s still a long road back to full recovery.”
Regionally, total construction starts improved in the South Central and West regions, while slipping in the Northeast, Midwest, and South Atlantic regions.
Nonresidential building starts shot 29% higher in October to a seasonally adjusted annual rate of $357.2 billion. The catalyst for the increase was a large gain in the manufacturing sector as two very large projects kicked off. If not for these projects, total nonresidential building starts would have been down 3% over the month. In October, commercial starts lost 4%, with only hotels posting a gain. Institutional starts gained 4%, with all categories rising. In the first ten months of 2021, nonresidential building starts were 11% higher. Commercial starts increased 9%, manufacturing starts were 94% higher (39% without the large projects this month), and institutional starts were up 3%.
For the 12 months ending in October 2021, nonresidential building starts were 4 percent higher than in the 12 months ending in October 2020. Both commercial and institutional starts were up 2 percent, and manufacturing starts moved 24 percent higher in the 12 months ending October 2021.
The largest nonresidential building projects to break ground in October were the $6.0-billion first phase of the Taiwan Semiconductor plant in Phoenix; the $1.3-billion Methanex Methanol plant in Geismar, Louisiana; and the $550-million second phase of the Loews Hotel and Convention Center in Arlington, Texas.