April construction starts retreat 8 percent

The value of new construction starts in April fell 8 percent from March to a seasonally adjusted annual rate of $608.3 billion and a Dodge Momentum Index of 129, Dodge Data & Analytics reports.

In April, nonresidential building dropped 19 percent to $185.1 billion. The was due in part to an 86 percent decline for the transportation terminal category. In addition, healthcare facilities dropped 10 percent, the public buildings category fell 16 percent and the amusement category fell 8 percent. Educational facilities also dropped 3 percent in April after climbing 21 percent in March.

The commercial building categories as a group fell 18 percent in April, with hotel construction dropping 49 percent and store construction falling 17 percent. Despite this, warehouse construction was up 15 percent, office buildings were up 8 percent and the manufacturing plant category rose 19 percent.

Residential building fell 8 percent in April to $269.1 billion. According to Dodge Data, the weaker activity was due to a slower pace for multifamily housing, which declined 26 percent. In April, there were five multifamily projects valued at $100 million or more that entered planning, compared to the 12 projects that entered planning in March.

Nonbuilding construction in March rose 10 percent to $154.1 billion, with public works up 39 percent and electric utilities/gas plants down 36 percent. Highway and bridge construction climbed 13 percent, and the miscellaneous public works category soared 180 percent.

According to Dodge Data, the 12 percent slide for total construction starts on an unadjusted basis during the first four months of 2016 came as the result of sizeable declines for both nonresidential building and nonbuilding construction.

“The construction start statistics on a month-to-month basis are subject to frequent ups and downs, so April’s decline after two months of improved activity was not a surprise,” says Robert Murray, chief economist for Dodge Data & Analytics.  “The elevated volume for nonresidential building in March was not expected to be sustained in the near term, yet the strength shown by its institutional segment in March does provide an indication of where growth is likely to come over the course of 2016.”