June 2017 construction starts rise 4 percent

New construction starts in June grew 4 percent from the previous month to a seasonally adjusted annual rate of $679.9 billion, according to Dodge Data & Analytics. The June statistics produced a reading of 144 for the Dodge Momentum Index, which is up from the 138 reading in May.

Nonresidential building was at $249.6 billion, up 13 percent from May. The sector had strengthened after two months of lackluster activity. There were eight office projects valued at $100 million or more that reached groundbreaking in June, led by a $585 million Facebook data center in Omaha, Nebraska. Hotel construction in June jumped 62 percent and the manufacturing building category increased 35 percent, but other commercial categories lost momentum in June. Institutional categories as a group were unchanged in June compared to May.

The nonbuilding construction sector was at $155.4 billion in June, which is an increase of 8 percent. The electric-utility/gas-plant sector ran counter to its generally declining trend this year, soaring 78 percent in June. Large electric utility projects included as June construction starts were a $1.3 billion natural-gas-fired power plant in Florida, a $1.1 billion wind farm and transmission line in Colorado and a $296 million wind farm in Texas. However, the public works category and miscellaneous public works category both fell 6 percent and 16 percent, respectively. Additionally, highway and bridge construction decreased 7 percent in June, Dodge Data & Analytics reports.

Residential building was at $274.9 billion in June, down 4 percent compared to May. Single-family housing slipped 4 percent, continuing to settle back from the strengthening that took place during the first two months of 2017. However, June’s pace for single-family housing was still 3 percent above the average monthly amount reported during 2016. In addition, multifamily housing dropped 7 percent, sliding back for the third month in a row.

According to Dodge Data & Analytics, the 4 percent decline for total construction starts on an unadjusted basis during the January to June period of 2017 was owing to reduced activity for nonbuilding construction, while residential building remained flat and nonresidential building experienced moderate growth.

“The first half of 2017 has seen nonresidential building advance, reflecting further growth for office buildings and warehouses, combined with the boost coming from the start of several massive airport terminal projects,” says Robert A. Murray, chief economist for Dodge Data & Analytics. “Residential building so far in 2017 has been mixed, with some growth for single-family housing earlier this year, while multifamily housing appears now to be trending downward after peaking in 2016. On balance, the volume of construction starts so far in 2017 is slightly ahead of last year, if one excludes the often volatile manufacturing building and electric-utility/gas-plant project types.”