Construction starts rise significantly in September 2017

The value of new construction starts in September rose 14 percent from the previous month to a seasonally adjusted annual rate of $814.8 billion, reports Dodge Data & Analytics.

September also produced a reading of 172 for the Dodge Momentum Index, which is up from the 151 reading in August.

Nonresidential building in September was at $368.8 billion, a 37 percent gain compared with its August number. The manufacturing building category jumped 490 percent; the institutional building categories as a group rose 25 percent; educational facilities increased 14 percent; and the public buildings category climbed 42 percent.

Despite this, healthcare facilities fell 2 percent, religious buildings dropped 5 percent and amusement-related projects fell 59 percent.

In addition, the commercial buildings categories as a group retreated 4 percent, with warehouse construction falling 14 percent, office construction increasing 23 percent, store construction up 12 percent and commercial garages up 2 percent.

According to Dodge Data & Analytics, residential building improved 1 percent in September to $298.9, with single family housing up 1 percent and multifamily housing up 2 percent. Seven multifamily projects valued at $100 million or more reached groundbreaking in September, and the top five metropolitan markets ranked by dollar volume of multifamily starts were New York, Dallas/Fort Worth, Philadelphia, Seattle and Boston.

Finally, nonbuilding construction in September fell 3 percent to $147.1 billion. Highway and bridge construction decreased 6 percent. The environmental public works categories showed a 41 percent increase in river/harbor development, an 18 percent increase in water supply construction and a 1 percent decrease in sewer construction. In addition, the miscellaneous public works category dropped 35 percent in September.

“The pattern of construction starts on a monthly basis has occasionally been subject to ‘spikes’, due to the presence of unusually large projects in a given month, and September certainly qualifies as one of those monthly ‘spikes,’” says Robert Murray, chief economist at Dodge Data & Analytics. “Looking at the data on a quarterly basis helps to ease the volatility present in the monthly statistics, and it shows the third quarter rebounding 8 percent after a 9 percent decline in the second quarter, returning the level of activity to within 2 percent of the strong pace achieved during the first three months of this year.

Through the first nine months of 2017, total construction starts on an adjusted basis were $557.7 billion, which almost matches the corresponding amount from the same time period one year ago, Dodge Data & Analytics reports. Nonresidential building increased 8 percent year-to-date, residential building increased 1 percent year-to-date and nonbuilding construction dropped 11 percent-year-to-date.