Nonresidential building rebounds while residential building continues at a brisk pace.

Contracting for new construction increased 2 percent to a seasonally adjusted annual rate of $491.4 billion, as reported by the F.W. Dodge Division of The McGraw-Hill Companies. Nonresidential building rebounded after a weak December, while residential building continued at a brisk pace. In contrast, the nonbuilding construction sector lost momentum, reflecting a sharp decline for electric power plants.

January's data raised the Dodge Index to 148, up from a reading of 145 for the previous two months. For all of 2001, the Dodge Index averaged 147.

Nonresidential building in January grew 8 percent to $165.5 billion. School construction, the largest nonresidential category by dollar volume, advanced 22 percent. The smaller institutional categories showed a mix of pluses and minuses in January. Strong gains were reported for healthcare facilities, up 21 percent; churches, up 37 percent; and transportation terminals, up 46 percent. Moving in the opposite direction were amusement related projects, down 17 percent; and public buildings (courthouses and detention facilities), down 18 percent.

The commercial side of the nonresidential market was generally weaker in January. Warehouses dropped 17 percent, while offices and hotels showed respective declines of 7 percent and 2 percent. Stores and shopping centers, up 18 percent, ran counter to the downward trend for the other commercial building types. Manufacturing plant construction witnessed further weakening in January, sliding an additional 27 percent.

Residential building, at $229.8 billion, was up 2 percent in January, as both single and multifamily housing posted 2 percent growth. By region, January showed this pattern for residential building-the Midwest, up 17 percent; the Northeast, up 16 percent; the South Atlantic, down 1 percent; the West, down 6 percent; and the South Central, down 7 percent.

Nonbuilding construction in January retreated 7 percent to $96.1 billion. The nonbuilding decline was due entirely to a 63 percent drop for electric power plants, marking a change from this category's exceptional contracting during the previous eight months. Electric utility starts in 2001 showed annual growth of 62 percent, on top of the substantial gains during the 1998-2000 period. The public works categories in January were generally stronger. The largest public works segment, highways and bridges, climbed 4 percent, and water supply systems advanced 3 percent. Two public works categories that had a lackluster 2001 showed healthy growth in January-sewers and river/harbor development work each jumped 35 percent.

On an unadjusted basis, total construction in January 2002 was reported at $35.3 billion, a decline of 3 percent from the same month a year ago. By sector, residential and nonbuilding construction showed respective gains of 5 percent and 3 percent, while nonresidential building cam ein 15 percent below its January 2001 level. The regional pattern for total construction in January 2002 compared to the prior year was the following-Midwest, up 17 percent; South Atlantic, up 13 percent; Northeast, down 8 percent; South Central, down 11 percent; and the West, down 18 percent.