Construction starts up 37 percent in November 2019

As a whole, November construction starts improved 37 percent compared to October. Chart courtesy of Dodge Data & Analytics

New construction starts surged 37 percent in November, compared to October, to a seasonally-adjusted annual rate of $988.9 billion, according to Dodge Data & Analytics.

The gain, which comes on the heels of an 11 percent decline in October, pushed the Dodge Index to 209, compared to the 153 posted in October. The average of the two months is 181, which is relatively in line with the 11-month average of 173.

By major sector, nonbuilding starts climbed 82 percent higher over the month while nonresidential starts improved 61 percent. Residential starts, meanwhile, were flat from October to November.

“The presence or absence of large projects continues to add immense volatility to the monthly data,” says Richard Branch, chief economist of Dodge Data & Analytics. “However, the underlying trend for the year remains intact – that construction starts are settling back following nine consistent years of growth.”

Nonbuilding

Nonbuilding construction escalated 82 percent higher in November to a seasonally-adjusted rate of $288.5 billion. Electric utility/gas plants were boosted with the starts of a large liquefied natural gas (LNG) plant and several wind power projects. Additionally, environmental public work starts rose 51 percent while highway and bridge starts moved 18 percent higher. In contrast, miscellaneous nonbuilding starts dropped 33 percent in November.

The largest nonbuilding construction project to break ground in November was the $4 billion first phase of the Golden Pass LNG facility in Sabine Pass, Texas. Other notable projects starting in November were the $743 million Cheyenne Ridge Wind Farm in Cheyenne Wells, Colorado, and the $650 million High Prairie Wind Farm in Greentop, Missouri.

Nonbuilding construction was 6 percent higher through the first 11 months of the year, compared to the same period in 2018, while the electric utility/gas plant category improved 111 percent compared to the prior year. Environmental public works improved 2 percent over the year while miscellaneous nonbuilding dropped 19 percent. Highway and bridge starts fell 8 percent.

Nonresidential

Nonresidential building increased by 61 percent in November to a seasonally-adjusted annual rate of $366.5 billion. Manufacturing starts skyrocketed 782 percent over the month, largely in part to the start of a petrochemical plant, while institutional starts (27 percent) and commercial starts (23 percent) also moved higher. Only two nonresidential building categories – hotels and healthcare – dropped in November.

The largest nonresidential building project to break ground in November was a $7 billion ExxonMobil petrochemical ethylene project in Gregory, Texas. Other notable projects to start in November were the $330 million Rancho Los Amigos South Campus office building in Los Angeles and the $296 million first phase of the Volkswagen body shop in Chattanooga, Tennessee.

Despite these projects, year-to-date nonresidential building starts were 3 percent below the same period of 2018. Commercial building starts, however, improved 3 percent with gains in office buildings, parking structures and warehouses. Institutional starts were down 6 percent through November while manufacturing starts were down 15 percent.

Residential

Residential building starts were essentially flat in November, according to Dodge, to a seasonally-adjusted annual rate of $333.9 billion. Single-family starts fell 8 percent over the month, counteracting a 20 percent climb in multifamily starts.

The largest multifamily building to break ground was the $500 million Calyer Place apartment development in Brooklyn, New York. Other notable projects to start in November were the $350 million Seattle House Mixed-Use development in Seattle and the $350 million Avenue Bellevue Mixed-Use development in Bellevue, Washington.

On a year-to-date basis, total residential building starts were down 4 percent, single-family starts fell 2 percent and multifamily starts dropped 10 percent.