Construction starts in 2017 boast improvement

New construction starts in December climbed 12 percent to a seasonally adjusted annual rate of $733.3 billion and a Dodge Index of 155, reports Dodge Data & Analytics.

According to Dodge Data & Analytics, for all of 2017, total construction starts grew 3 percent to $745.9 billion, which followed a 6 percent increase reported for 2016.

Nonresidential building in December was $240.3 billion, up 10 percent from November. The commercial building categories as a group rose 17 percent, with office buildings increasing 42 percent. Hotel construction grew 5 percent, warehouse construction climbed 12 percent, commercial garages fell 1 percent and store construction decreased 2 percent.

In addition, the institutional building categories as a group increased 9 percent in December, with healthcare facilities increasing 29 percent public buildings rising 89 percent and the transportation terminal category rising 42 percent. In addition, religious buildings were up 4 percent, amusement-related work was up 3 percent and the manufacturing plant category fell 37 percent.

For 2017 as a whole, nonresidential building advanced 7 percent to $270.7 billion, with the commercial categories as a group falling 3 percent. Store construction and commercial garages fell 10 percent each, hotel construction dropped 5 percent and office construction fell 2 percent. In addition, the manufacturing plant category advanced 21 percent, following a 20 percent decline in 2016.

In 2017, the institutional buildings category climbing 14 percent. Under this category, transportation terminal work increased 121 percent, educational facilities rose 6 percent, and college and university construction jumped 20 percent.

Residential building in December was up 1 percent at $308.1 billion. Single-family housing rose 1 percent and multifamily housing remained unchanged from its November page.

Residential building for 2017 was up 2 percent at $302.0 billion. Single-family housing rose 8 percent and multifamily housing fell 12 percent.

Nonbuilding construction in December rebounded 43 percent to $184.9 billion, with the public works categories rising 37 percent, highway and bridge construction increasing 66 percent, and river/harbor development soaring 155 percent. In addition, sewer construction was up 35 percent, water supply construction was up 25 percent and the electric utility/gas plant category was up 93 percent.

For the full year of 2017, nonbuilding construction dropped 2 percent to $173.2 billion. According to Dodge Data & Analytics, the nonbuilding decline was mostly the result of a 35 percent plunge for the electric utility/gas plant category. Despite this, the public works categories increased 10 percent and the miscellaneous public works category increased 35 percent, which included a 7 percent increase in highway and bridge construction. In addition, the environmental public works categories registered decreased activity in 2017, with river/harbor development down 2 percent, sewer construction down 10 percent and water supply construction down 17 percent.

“The construction industry over the past two years has made the transition to a more mature stage of expansion, characterized by slower rates of growth for total construction compared to the 11 percent to 13 percent yearly gains during the 2012-2015 period,” says Robert Murray, chief economist for Dodge Data & Analytics. “For 2018, the construction expansion is anticipated to continue at a modest pace. The tax reform package is expected to provide a near term lift to overall economic growth, and the likely beneficiaries would be commercial building and multifamily housing.”