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Construction starts up 12 percent in January

By |  February 22, 2017

The value of new construction starts in January climbed 12 percent to a seasonally adjusted annual rate of $690.2 billion, according to Dodge Data & Analytics.

After losing momentum during last year’s fourth quarter, nonresidential building strengthened in January, with much of the lift coming from the start of the $3.4 billion Central Terminal Building at LaGuardia Airport in New York, as well as groundbreakings for several other large airport terminal projects.

Nonbuilding construction bounced back from a subdued December, with the boost arising from a $750 million natural gas-fired power plant in Florida plus two pipeline projects – the $900 million Plains Diamond oil pipeline in Arkansas and Oklahoma, and the $767 million Presidio Crossing natural gas pipeline in Texas.

“The 12 percent gain for total construction starts in January gets 2017 off to a healthy beginning, following the declines reported toward the end of 2016,” says Robert A. Murray, chief economist for Dodge Data & Analytics.

Residential building, meanwhile, edged upward in January as the result of a slight gain for single-family housing. On an unadjusted basis, total construction starts in January were reported at $48.5 billion, down 3 percent from the same month a year ago, which included especially strong amounts for the often volatile manufacturing plant and electric utility/gas plant categories. If manufacturing plants and electric utilities/gas plants are excluded, total construction starts in January would be up 10 percent from last year’s corresponding volume.

According to Dodge Data & Analytics, the January statistics raised the Dodge Index to 146. The index, which was at 130 in December, reached its 2016 peak in August at 156, and it held close to that level in September at 153.

“What’s noteworthy about January’s rebound is that the institutional side of the nonresidential building market, led by airport terminal work, has assumed a more substantial role in keeping the expansion going,” Murray says. “The institutional side of nonresidential building has typically lagged the pattern shown by commercial building, and its continued growth is needed for overall nonresidential building to advance further in 2017.”

While commercial building is also expected to see growth in 2017, its rate of increase will be restrained as vacancy rates level off and banks in the near term maintain a cautious stance toward commercial real estate loans pending any changes to the Dodd-Frank regulations, Murray says.

“The public works sector is also anticipated to strengthen in 2017, with help coming from more pipeline work, although Congress needs to finalize fiscal 2017 appropriations, which, at the moment, are set at essentially status quo levels under a continuing resolution that expires at the end of April,” he says. “The proposal for greater infrastructure spending by the Trump administration, assuming it gets passed in some form by Congress during this year’s first half, may not have a discernible impact on public works construction starts until the end of 2017 and into 2018.”

Kevin Yanik

About the Author:

Kevin Yanik is the editor-in-chief of Pit & Quarry magazine. Yanik can be reached at 216-706-3724 or

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