Public projects surge, private starts falter | Dump Trucks Charlotte NC

Columbus Ohio Dump Truck Company Brief:

• Total construction starts continued their 2023 roller coaster ride, jumping 8% in May to a seasonally adjusted annual rate of $1.11 trillion due to strong gains in manufacturing and infrastructure, according to Dodge Construction Network.
• After an unexpected 68% drop in manufacturing project kickoffs in April dragged down all starts, manufacturing starts more than doubled in May. Growth in the manufacturing and infrastructure sectors, however, was largely offset by contractions in commercial and residential construction — think office, retail and housing — marking an overall bifurcation of building activity.
• “May’s data is another sign that the construction sector is slowly splitting into two,” said Richard Branch, chief economist for Dodge Construction Network. “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.”

Dump Trucks Columbus OH Insight:

While construction in manufacturing and infrastructure report strong activity, the private sectors of the building market are posting worrying signs, as they struggle under the weight of higher interest rates, tightening lending standards and declining demand, said Branch. 

Commercial starts dropped 20% in May due to a sharp pullback in office and retail commencements, according to the report, while institutional starts, such as schools and hospitals, ticked down 1% in May.

“The second half of the year is shaping up to be a challenging one,” said Branch. “But, the insulation provided by manufacturing and infrastructure starts will stabilize the industry and lead to modest overall growth.”

Due to manufacturing’s strength, activity in the broader nonresidential sector also jumped 8%, mirroring the boost for all construction starts. But on a year-to-date basis through May, total new project launches were down 6% compared to 2022.  

The largest nonresidential building projects to break ground in May included:

• The $1.9 billion Steel Dynamics aluminum plant in Columbus, Mississippi.
• The $1.9 billion Eli Lilly & Co. facility in Indianapolis, Indiana.
• The $1.5 billion Ford Ohio EV plant in Sheffield, Ohio.

Slow residential construction activity

Activity in the residential sector continues to post slow activity, down 25% in 2023, according to Dodge.

Building starts in the sector fell 4% in May, led by an 8% drop in multifamily starts. For the 12 months ending in May 2023, residential starts posted a 15% decline to the prior year.

The largest multifamily building projects to break ground in May included:

• The $414 million North Cove mixed-use building in New York, New York.
• The $190 million Albany Terrace and Irene McCoy Gains apartments in Chicago, Illinois.
• The $190 million Kaye Luxury apartment tower in Seattle, Washington.

Nonbuilding construction growth surges again

Nonbuilding activity, such as gas plants, streets and bridges, increased 24% in May, and remains 25% higher on a year-to-date basis, according to Dodge.

Street and bridge projects, bolstered by public funding, jumped 22% in May, while utility and gas plant starts boomed 53% over the month. For the 12 months ending in May 2023, nonbuilding starts posted 30% growth compared to the previous year.

The largest nonbuilding projects to break ground in May include:

• The $5.3 billion train for the Port Arthur LNG project in Port Arthur, Texas.
• The $1.5 billion Southeast Connector Interchange highway project in Fort Worth, Texas.
• The $925 million Amtrak/Metro Norwalk Bridge Replacement project in Norwalk, Connecticut.