New U.S. construction starts in March climbed 8 percent to a seasonally adjusted annual rate of $475.7 billion, it was reported April 19 by McGraw-Hill Construction.

The gain for total construction in March followed two months of decline, and was led by a strong increase for the non-building construction sector (public works and electric utilities).  At the same time, March witnessed slightly reduced activity for both housing and nonresidential building. During the first three months of 2013, total construction starts on an unadjusted basis came in at $100.5 billion, unchanged from the same quarter a year ago.

“After the slowdown in early 2013, the March improvement for total construction is in line with what’s been seen over the past year – that being, an up-and-down pattern around a gradual rising trend,” stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. “The support for total construction in March came from public works and electric utilities, which bounced back from a particularly weak February.

“Still, both segments are not expected to register much growth for 2013 as a whole, as public works construction is facing federal budget constraints while electric utility construction is pulling back from the record high achieved in 2012. Residential building in March paused from its steady increases over the past year, with growth likely to resume in coming months. The modest decline for nonresidential building in March was consistent with its struggle to establish upward momentum, as the gains for commercial building stay tenuous while institutional building remains in the process of bottoming out.”

The “no change” for total construction starts for the first three months of 2013 compared to 2012 was due to varied behavior by the major construction sectors.  Residential building registered healthy year-to-date growth, climbing 33 percent with similar gains for single family housing, up 33 percent; and multifamily housing, up 32 percent. 

Nonresidential building in the January-March period of 2013 dropped 9 percent, reflecting an 18 percent decline for the institutional categories.  On the plus side for nonresidential building, the commercial categories were up 2 percent year-to-date while manufacturing plant construction grew 20 percent.  Nonbuilding construction in the first three months of 2013 fell 23 percent, as a 75 percent plunge for electric utilities outweighed a 19 percent gain for public works.

Geographically, total construction starts in the January-March period of 2013 vs. the last quarter of 2012 showed gains in three regions – the Northeast, up 20 percent; the South Central, up 14 percent; and the West, up 3 percent.  Year-to-date declines were reported in two regions – the Midwest, down 1 percent and the South Atlantic, down 22 percent.