New construction starts in March slipped 1% to a seasonally adjusted annual rate of$475.2 billion, it was reported byMcGraw-Hill Construction Dodge, a division of The McGraw-Hill Companies. Both nonresidential building and housing fell slightly, while nonbuilding construction made a partial rebound from a weak February.

"Last year the construction industry leveled off, and the early results for 2003 are now pointing toward a mild loss of momentum," stated Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction Dodge. "Single family housing has held up quite well, thanks to low mortgage rates, but other construction sectors have been dampened by the lackluster economy, the diminished fiscal health of the federal and state governments, and uncertainty related to the buildup towards war against Iraq. The quick end to hostilities has lifted some of the uncertainty, but it may take some time before the economy strengthens in a sustained manner, and it will be even longer before the federal and state governments see improvement in their fiscal positions. In this environment, the moderate slowdown experienced by construction during the first quarter provides a good indication of how the year as a whole will play out."

Nonresidential building in March dropped 1% to $140.8 billion. After registering growth in February, the commercial categories slipped back once again in March – stores, down 12%; hotels, down 16%; offices, down 24%; and warehouses, down 36%. "The commercial categories in recent months have shown an up-and-down pattern, so the March retreat following February's upswing is consistent with that trend," stated Murray.

"After the extended declines during 2001 and 2002, the commercial categories now appear to be hovering at a decreased volume, which is likely to persist for at least a few more quarters." Although down from its February pace, hotel construction in March did include the start of a $143 million hotel/casino project in Las Vegas. The long-depressed manufacturing plant category was able to report a 10% gain in March.

The institutional side of the nonresidential market offset much of the March weakness for commercial building. The educational building category grew 5%, supported by the start of a $120 million bioengineering laboratory building at the University of California, Berkeley; plus the start of an $88 million library in Jacksonville, FL. Health care facilities in March climbed 23%, while the public building category jumped 47% with the push coming from the start of a $113 million federal prison project in Arizona. Transportation terminal work was up 96%, boosted by the start of a $106 million terminal renovation at Chicago's O'Hare Airport. Two institutional categories that lost momentum in March were churches, down 1%; and amusement-related projects, down 7%.

During the first three months of 2003, total construction on an unadjusted basis was 7% below the same period in 2002. Pulling total construction downward were declines of 15% and 22% for nonresidential building and nonbuilding construction, respectively, outweighing a 4% increase for residential building. On a regional basis, total construction in the January-March period was the following: the West, up 6%; the South Central, down 3%; the South Atlantic, down 8%; the Midwest, down 12%; and the Northeast, down 27%.