February was not a great month for the construction industry, with total construction starts falling 8% to a seasonally adjusted annual rate of $1.07 trillion, according to the Dodge Construction Network.
Per the latest report, non-residential building starts dropped 16%, while nonbuilding starts lost 3%, and residential starts fell by 2%.
On a 12-month rolling sum basis ending in February 2024, total construction starts were up 2% from year-over-year. This includes a 2% decline in nonresidential starts, a 4% decline in residential starts, and a 19% increase in nonbuilding starts.
Notable year-over-year declines occurred in the commercial, manufacturing, and institutional sectors. Commercial starts saw a 3% drop due to a sizeable pullback in warehouse starts. Manufacturing starts were off by 28% and institutional starts were down 19% with a decline in transportation and education construction.
“Construction activity was hit hard by higher rates and more restrictive credit standards”, said Richard Branch, chief economist for Dodge Construction Network. “Starts struggled over the past several months as the lagged effect of higher rates impacted projects moving forward through the planning process.”
Continued deficits in the skilled labor workforce also delayed projects, particularly in the manufacturing sector.
“While optimism should prevail in the second half of the year as the Federal Reserve begins to cut rates, some sectors like commercial, will make little headway over the remainder of the year,” Branch said.
