U.S. construction starts came in below expectations during the first quarter as severe weather greatly impacted construction activity. Residential starts were hit the hardest, with the Northeast and Midwest regions most affected, according to CMD’s latest quarterly forecast report.
The forecast, which combines CMD’s proprietary data with macroeconomic factors, showed total starts performing about 14 percent lower than forecasted. The disappointing results could have been worse, but were buoyed by a dramatic increase in March starts in both the residential and non-residential sectors.
“In many areas, new construction simply halted as building firms waited for the snow to thaw,” said Alex Carrick, CMD chief economist. “As a result, the forecast for total residential starts for the rest of 2015 has been downgraded significantly to 14.7 percent growth, from 19.9 percent in our last forecast, while non-residential starts have been downgraded from 7.8 percent to 6.4 percent. I do, however, expect construction to pick up steam in the second quarter.”
According to the report, extreme weather conditions also negatively affected U.S. gross domestic product in Q1. Despite the lack of construction activity, economic fundamentals remain positive, particularly for the consumer, which points to stronger growth for the rest of the decade in the residential sector and in consumer-oriented non-residential construction such as retail development.
“While the dramatic drop in the world price of oil and the stunning appreciation in the value of the U.S. dollar versus many other currencies will negatively impact some investment plans, construction starts and activity levels will benefit from a business cycle that is revving up faster than almost anywhere else in the global economy,” said Carrick.
CMD, the Inaugural Strategic Partner of the AIA, is a leading North American provider of construction information. CMD’s diverse portfolio of innovative products and technologies includes national, regional and local project leads, marketing solutions and market intelligence to provide insight to construction industry professionals throughout the U.S. and Canada. Visit the CMD website at cmdgroup.com.