NORCROSS, GA—Non-residential construction starts across the US declined 26.1% percent from August to September, CMD Group said Friday. The construction data provider says last month's results continue a downward trend seen in previous months.

September's new construction total, $15 billion, was off 41.8% year-over-year from September 2014. “There hasn't been a worse September figure in the past decade,” according to Alex Carrick, chief economist at CMD.

The last time monthly starts were as weak was in February 2012, when CMD data show that new construction totaled $13.9 billion. At that time, however, “winter weather, with its customary inhibiting effects, was partly the cause,” says Carrick.

This time, the sharp monthly drop in total starts has been mainly due to a “dramatic contraction” in one major sub-category, heavy engineering, down 59%. “ 'Road/highway' work, in particular, has gone into hibernation,' dropping off by 89%, according to Carrick. Commercial and institutional activity also retreated during September, but by far smaller percentages: 20% and 17%, respectively.

Although Carrick's update discusses mainly non-residential construction, CMD data show a falling-off in new starts for the residential sector, as well, specifically multifamily. September's new construction was off 39.1% from August and 30.4% Y-O-Y, while single-family starts were up 0.3% from the previous month and 41.5% from the year prior.

Across the board, though, year-to-date starts in non-residential construction are “still holding up not too badly,” Carrick says. “When compared with the same January-to-September period of last year, yes they are down, but by only 5.8%.” Furthermore, CMD data show that on a YTD basis warehouse construction was up 20.4% through September, although it too showed a month-over-month decline from August.

The firm notes that the Bureau of Labor Statistics has reported a total construction employment increase of 8,000 jobs in September. YTD employment in the sector has gone up by 121,000, or 13,400 per month. Although construction employment grew faster in September than total non-farm employment on a Y-O-Y basis, Carrick cites “a gradual slowing in the sub-sector's year-over-year improvement,” which posted its best result this past December, at 5.7%.

That being the case, CMD notes that the unemployment rate in construction in September tightened to 5.5% from 6.1% in August. A year ago, it had been 7.0%; two years ago, it was 8.5%.

Instant Insights /

Construction Starts Slide in September

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