New data from the Dodge Construction Network (DCN) has shown construction starts increasing to a seasonally adjusted annual rate of $1.11 trillion for the month of May following the 4% decline for April that ended a steady two-month series of gains.

Nonresidential starts rose 8% over the previous month thanks to gains in the manufacturing sector, while starts in the residential category were recorded to have declined at a 4% rate. Nonbuilding starts for the month rose a dramatic 24%, while the single-family sector recorded a 2% decrease following four consecutive months of gains. On a year-to-date basis, total construction starts were 6% below the first five months of 2022 overall.



“May’s data is another sign that the construction sector is slowly splitting in two,” Richard Branch, the chief economist for the network, said in a statement. “Public dollars are flooding into the manufacturing and infrastructure sectors, leading to significant growth over the last year. Meanwhile, the mostly private sectors of the building market like offices, multifamily, and retail are struggling under the weight of higher interest rates, tightening lending standards, and declining demand. The second half of the year is shaping up to be a challenging one. But, the insulation provided by manufacturing and infrastructure starts will stabilize the industry and lead to modest overall growth.”

The largest nonbuilding project to break ground was the $5.3 billion Port Arthur LNG Phase 1 in Texas, followed by the leading nonresidential $1.9 billion Steel Dynamics aluminum plant in Columbus, Mississippi.

The DCN shares that, for the 12-month period ending in May 2023, residential starts were 15% lower than that of 2022. Single-family starts also were 26% lower, while multifamily starts were up 9% on a rolling 12-month basis.

Regionally, total construction starts in May fell in the Northeast and West, while gains were recorded in the Midwest, South Atlantic, and South Central regions.

Source: Dodge Construction Network