Report: Construction unchanged in August.

At a seasonally adjusted annual rate of $468.8 billion, contracting for new construction was essentially unchanged from the prior month, according to the F.W. Dodge division of The McGrawHill Companies. Moderate improvement was reported for nonresidential building, in contrast to reduced contracting for housing. Non-building construction was also down slightly in August, as a slower pace for new power plant projects outweighed further growth for public works.

The latest month's data resulted in a reading of 141 for the Dodge Index, unchanged from a revised July. From March through August, the Dodge Index stabilized close to last year's average level of 142. "For much of 2001, the construction industry has been one of the better performing sectors of a sluggish economy," stated Robert A. Murray, vice president of economic affairs for F. W. Dodge. "Continued expansion for public works, power plants, and schools offset a downward trend for commercial building, while the housing market stayed healthy. However, growing weakness for the economy in the aftermath of the September 11th terrorist attack is expected to adversely affect construction, due to diminished homebuyer demand and a more pronounced pullback by commercial building."

Nonresidential building in August rebounded 4% to $154.5 billion. School construction, the largest nonresidential category by dollar volume, showed additional strength by rising 5%. The institutional side of the nonresidential market was also helped by a 50% increase for "amusement-related" work, boosted by large convention center projects in Las Vegas ($225 million) and the Atlanta area ($60 million). Healthcare facilities and churches each registered 4% gains, while public buildings (courthouses and detention facilities) retreated 17% from an elevated July.

The commercial categories in August included substantial improvement for hotels and warehouses, up 40% and 23% respectively, although in both cases the increases were relative to an exceptionally weak July. Offices advanced 7%, while store construction was down 8% and commercial garages fell 22%. Murray noted, "The August gains for hotels, warehouses, and offices are just a brief departure from this year's general pattern, and the downward trend should resume as developers put more projects on hold in response to the weaker economic climate." Manufacturing plant construction stayed depressed in August.

Residential building, at $211.0 billion, registered an August decline of 3%. Single family housing fell 4%, while multifamily housing cushioned the residential slide with a 7% gain. Murray stated,

"Homebuyer demand this year held up quite well through the summer, but September's sharp drop in consumer confidence should lead to diminished demand, which will be closely followed by reduced construction." By geography, residential building in August showed gains in the Northeast (up 6%) and the West (up one percent), but declines in the Midwest (down 3%), the South Central (down 5%), and the South Atlantic (down 7%).

Non-building construction in August eased back one percent to $103.3 billion. Electric power plant construction was down 22% from July's robust amount, although August was still a very healthy month by recent standards -- 50% above the average pace during 2000. The power plant total included three large projects in these states: New York ($499 million), California ($350 million), and Washington ($299 million). Public works construction in August was generally stronger, including a 26% gain for highways and bridges boosted by the start of a $500 million bridge project in South Carolina. Water supply projects advanced 5% and river/harbor development work rose 3%, but sewer construction fell 11%.

During the first eight months of 2001, total construction on an unadjusted basis was up 2% compared to the prior year. Residential building grew 4% and non-building construction advanced 9%, but nonresidential building was down 5%. By geography, total construction showed this pattern during the January-August period -- the West, up 6%; the South Central, up 5%; the Midwest, unchanged; the South Atlantic, down one percent; and the Northeast, down 2%.