According to a new Dodge Construction Network report, total construction starts rose 9% in February to a seasonally adjusted annual rate of $1.013 trillion. Nonresidential building starts carried the activity, jumping 32% due to the start of three large manufacturing facilities. However, residential starts fell 3% and nonbuilding starts fell by less than 1%. Without the three manufacturing projects, total construction would have declined 6% last month.
Total construction was 14% higher in the first two months of 2022 than in the same period of 2021. Nonresidential building starts are up 39%, nonbuilding starts rose 4%, and residential starts gained 5%. For the 12 months ending February 2022, total construction starts were 16% higher than the 12 months ending February 2021. Nonresidential jumped 23%, residential starts increased by 19%, and nonbuilding rose 1%.
“The manufacturing sector has been an important success story for construction since the pandemic began,” said chief economist for Dodge Construction Network, Richard Branch. “Domestic producers are expected to seek more control over their supply chains in the future, so that aspect of construction should continue to flourish. However, as evident in February’s data, other sectors are struggling to gain traction in the face of high material prices and worker shortages. The conflict in Ukraine will continue to put upward pressure on costs, making the sector’s recovery more tenuous in 2022.”
While nonbuilding construction starts fell in February, activity is higher over the 12 months ending February 2022 compared to the 12 months ending February 2021, reporting a 1% gain. Last month, utility/gas starts rose 66%, while environmental public works fell 23%, and starts for highways and bridges as well as miscellaneous nonbuilding projects each fell by less than 1%.
Within the residential building sector, single-family starts decreased 4%, with multifamily starts increasing 2% in February. For the 12-month period ending February 2022, residential starts improved 19% compared to the same period the year prior. Single-family starts rose 14% and multifamily increased by 31% on a 12-month rolling sum basis.
The surge in nonresidential building starts last month is due to three large plants that broke ground. They are the $20 billion Intel chip fabrication plants in Chandler, Arizona, Steel’s $1.5 billion steel mill in Osceola, Louisiana, and Intel’s $3.5 billion renovation of the Rio Rancho, New Mexico semiconductor facility. If not for these three projects, total nonresidential starts would have fallen 15%.
Regionally, total construction starts in February rose in the Midwest, South Atlantic, and West regions but fell in the Northeast and South Central.
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