Tough Competing with ‘Normal’ but 3 Mega Projects Helped
ConstructConnect announced today that March 2021’s volume of construction starts, excluding residential work, was $32.2 billion, an increase of +60.1% versus February’s distressed level of only $20.1 billion.
Total nonresidential (NR) groundbreakings in the latest month received boosts from three mega-sized projects, an auto plant expansion in Tennessee and two big hospital jobs located in Ohio and California.
Leaving aside the exceptional weakness of total NR starts in the previous month (February), latest March’s starts volume failed to match year-ago March’s level, falling short by -7.9%.
Also, year to date starts through the first quarter of 2021 were off by one-fifth (-20.0%) relative to January-March 2020.
Keep in mind that Q1 of last year was mostly ‘normal’ with respect to a broad range of economic indicators, including ‘starts’. The truly harmful effects caused by the outbreak of coronavirus infections occurred from Spring 2020 on. Proceeding further into 2021, a ‘diminishing base (or denominator) effect’ will put a better polish on year-over-year comparisons.
The Starts vs PIP Relationship
‘Starts’ compile the total estimated dollar value and square footage of all projects on which ground is broken in any given month. They lead, by nine months to as much as two years, put-in-place (PIP) statistics which are analogous to work-in-progress payments as the building of structures proceeds to completion.
PIP numbers cover the ‘universe’ of construction, new plus all manner of renovation activity, with residential traditionally making up two-fifths of the total and nonresidential, three-fifths (i.e., the bigger portion). Presently, though, according to the Census Bureau’s February 2021 PIP report for total U.S., the mix has skewed more towards residential (47% of the total) and away from nonresidential (53%) than usual.
PIP numbers, being more spread out, have smaller peak-over-trough percent-change amplitudes than the ‘starts’ series. As an additional valuable service for clients and powered by its extensive ‘starts’ database, ConstructConnect, in partnership with Oxford Economics, a world-leader in econometric modeling building, has developed put-in-place construction statistics by types of structure for U.S. states, cities and counties, ‘actuals’ and forecasts.
