Manufacturing and Transportation Drove Construction Growth in August

  • Editorial Team
  • Heavy Construction Equipment
  • 25 September 2023

In August, the construction sector experienced a notable 6 percent increase in construction starts, reaching a seasonally adjusted annual rate of 1.3 trillion dollars. This growth was primarily attributed to the mass activity in the manufacturing and transportation building sectors, while other areas faced some challenges. This became the highlight of construction trends in August.

The Surge of Nonresidential Building Starts  

The manufacturing and transportation industries played a big, big role in boosting nonresidential building starts by a remarkable 40 percent. Manufacturing projects, in particular, witnessed an impressive 285% increase, contributing a lot to the surge in nonresidential building starts. If manufacturing were excluded, this category would still have grown by a substantial 24%. Commercial construction starts also saw an 8% increase, driven by advances in parking garages and hotels. Institutional construction starts rose by 35%, with all sectors except dormitories experiencing some growth.

Notable Nonresidential Projects 

Some non-residential projects also broke ground in August.

John Palmour Manufacturing Center for Silicon Carbide in Silver City, North Carolina, costing $2.5 billion.

VinFast electrical car manufacturing facility in New Hill, North Carolina, with a budget of $2 billion.

Midfield Satellite Concourse at Los Angeles International Airport, amounting to $1.4 billion.

Nonbuilding Construction Sees a Downturn 

While nonresidential building starts thrived, the nonbuilding construction sector on the other hand faced a 14% decrease in August, reaching a seasonally adjusted annual pace of $380 billion. This decline followed a month of growth in July, primarily driven by Bechtel’s 12 billion dollar LNG project in Brownsville, Texas. However, year-to-date through August, nonbuilding starts remained up by 22%, and for the 12 months ending in August 2023, they were 20% higher than the previous year.

Prominent Nonbuilding Projects 

Some of the major nonbuilding projects that commenced in August are;

TransWest Transmission Project spanning Wyoming, Colorado, Utah, and Nevada, valued at $3.5 billion.

Mid-Barataria Sediment Diversion projects in Port Sulphur, Louisiana, costing $2.9 billion.

The Maine section of the $1.5 billion New England Clean Energy Connect Power Line.

Residential Construction Challenges 

In contrast to the growth of the nonresidential and nonbuilding construction, residential building starts actually saw a 1% decrease in August, with a seasonally adjusted annual rate of $418 billion. Despite a surge in apartment demand over the summer, single-family starts increased by 2%, while the multifamily starts declined by 5%. Total residential starts were down by 18% year-to-date through August 2023, and for the 12 months ending in August 2023, residential starts were down by 17% compared to the previous year.

Multifamily Projects 

The most substantial multifamily projects that started construction in August were;

Hub on Campus building in Knoxville, Tennessee, with a budget of $530 million.

The tower at 250 Water Street in New York City, costing $425 million.

Ritz Carlton homes in North Palm Beach, Florida, totaling $340 million.

Challenges Ahead 

Despite the overall growth with new construction projects, the industry faces several challenges. Rising interest rates, a shortage of available labor, and stricter lending rules may become a problem for construction projects in the final quarter of the year. The American Institute of Architects’ Architecture Billings Index also indicates a potential slowdown in activity, reflecting sluggish business conditions at architecture firms and limited monthly changes in the new project work and ongoing project activity.