Contracting for new construction in March decreased 5% to a seasonally adjusted annual rate of $462.8 billion, according to the F.W. Dodge Division of The McGraw-Hill Companies. Nonresidential building and housing showed slight weakening, while a larger decline was reported for nonbuilding construction such as public works and utilities, following an exceptionally strong February.

"The construction industry witnessed a healthy beginning to 2001, proving to be resilient against the backdrop of a slowing economy," said Robert A. Murray, vice president of economic affairs for F.W. Dodge. "The March report shows activity settling back to a pace closer to what occurred during most of last year. There may be some concern that this represents the start of an extended decline, although it appears more likely that the construction industry is now in the process of leveling off near its 2000 volume."

Nonresidential building in March slipped 1% to $171.3 billion. The institutional sector experience in decline in contracting after a strong performance in January and February. School construction, the largest institutional category, was down 10% in March. Healthcare facilities slipped 3%, while larger declines were reported for churches, down 26%; courthouses and detention facilities, down 44%; and transportation terminals, down 45%.

The commercial side of the nonresidential market offered a mixed picture. Declines were posted for stores and shopping centers, down 11%; and hotels, down 31%. Warehouses climbed 15%, while office construction advanced 17%. Supporting the March increase for offices were the following-a $165 million office complex in San Francisco and a $43 million project in San Jose.

Murray noted, "While vacancy rates have been edging up in some markets, the office sector continues to be in generally good balance, which will help to limit any pullback for construction this year." The nonresidential total was also boosted by strong improvement for the long-depressed manufacturing plant category, which jumped 99% in March. Aiding the manufacturing upturn were two large projects in Oklahoma-a $600 million truck manufacturing plant and a $200 million optical fiber plant.

In terms of geography, total construction showed this pattern during the first three months of 2001 - the West, up 7%; the South Central, up 4%; the Midwest, down 2%; the Northeast, down 3%; and the South Atlantic, down 7%.