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News June 17, 2020

May contracts increased 3%

Dodge Data & Analytics, New York, has reported construction starts rose 3% in May. Total construction starts in May were down 12% compared with May 2019.

Several large nonresidential building projects broke ground in May, resulting in the gain; removing those large projects from the statistics would have resulted in no change in starts for the month.

“While May’s increase in construction starts is certainly good news, the influence of several large projects undermines the notion that the construction sector has fully entered recovery,” says Richard Branch, chief economist for Dodge Data & Analytics. “Even as state and local areas reopen and bans on construction activity in Boston, New York City and other areas are lifted, the sector will have to contend with digging itself out from a deep economic recession. While the overall economy most likely hit bottom in May, the recovery will be slow since nearly 20 million jobs have been lost since February. The second half of 2020 will be a slog, and gains will be modest over the short term.”

Nonresidential building construction increased 8% in May. Commercial construction starts rose 6% in May; manufacturing starts surged 167%; and institutional starts were unchanged.

Residential building construction rose 4% in May. Single-family housing grew 2%, and multifamily construction climbed 10%.

Nonbuilding construction decreased 4% in May.

For the 12 months ending in May, nonresidential building was down 7% compared with the 12 months ending April 2019. Residential building increased 1%, and nonbuilding construction rose 5%.

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