August marked the third consecutive month of declines in total construction starts. While some sectors like commercial saw a modest increase of two percent, and manufacturing starts saw an encouraging 33 percent increase, on-the-whole nonresidential building starts dropped 13 percent.

Nonbuilding construction starts dropped 2 percent while residential building starts dropped nine percent.

These numbers are not promising. “Construction starts have hit a rough patch following the euphoria seen in the early stages of recovery from the pandemic,” said Richard Branch, Chief Economist for Dodge Data & Analytics, the company behind the analysis.

“The Delta variant has raised concern that the fledgling economic recovery is stalling out, undermining the already low level of demand for most types of nonresidential buildings. Additionally, significant price increases for construction materials, logistic constraints, and labor shortages are making a challenging situation worse,” Branch added. “Construction starts are likely to remain unsteady over the next few months. However, the dollar value of projects entering planning continues to suggest that the recovery in construction starts should resume early in the new year.”

Breaking the numbers down further, nonbuilding construction starts, which only saw a two percent decline, include: water-related public works projects (which were up four percent); miscellaneous heavy pipeline construction projects (up 14 percent); highway and bridge starts (down 4 percent); utility and gas (down 21 percent).

Year-to-date, nonbuilding construction starts are up, but only by a single percentage point. This is strong evidence that pandemic recovery has been derailed by the Delta variant.

As far as nonresidential building starts, which were down 13 percent, “the declines were broad-based across building types with few bright spots,” reports Business Wire. Commercial starts dropped 10 percent; institutional starts dropped 15 percent, and manufacturing starts dropped 37 percent. Gains were seen in retail and parking however.

“For the 12 months ending in August 2021, nonresidential building starts were 8% lower than in the 12 months ending in August 2020,” Business Wire reports.

In terms of residential building starts, single-family starts dropped 12 percent while multifamily starts saw a modest increase of one percent. The good news with residential however is that it’s up 21 percent over the 12 months preceding August 2020.