Construction starts up significantly in May 2018

Graphic courtesy of Dodge Data & Analytics.

New construction starts in May improved 15 percent from April to a seasonally-adjusted annual rate of $783.6 billion, according to Dodge Data & Analytics.

The May statistics raised the Dodge Index to 166, compared to April’s reading of 144.

The 15 percent increase follows a 12 percent decline in April, and the uptick in May shows total construction activity reaching the highest level reported over the past eight months.

The May improvement stems from substantial gains for nonbuilding construction, which is up 39 percent, and nonresidential building, which is up 18 percent.

Nonbuilding construction, specifically the public works segment, was boosted by the start of three large natural gas pipelines with a combined construction start cost of $4.6 billion. In addition, the nonbuilding construction sector benefits from a $1.4 billion project related to the start of an environmental cleanup project at Los Alamos National Laboratory in New Mexico, a $1.4 billion rail transit project in Los Angeles, and a $1.1 billion rail transit project in the Boston area.

Nonresidential building was aided by the start of a $1.0 billion Facebook data center in Nebraska, the $764 million expansion to the Washington State Convention Center in Seattle and a $740 million airport terminal project at Salt Lake City International Airport.

Meanwhile, residential building in May was on par with its April pace. 

Through the first five months of this year, total construction starts on an unadjusted basis were $299.9 billion, down 3 percent from the same period in 2017. On a 12-month moving total basis, total construction starts for the 12 months ending May 2018 were up 1 percent from the reported amount for the 12 months ending May 2017.

“During the first five months of 2018, total construction starts have shown an up-and-down pattern, with May coming in strong after a subdued April,” says Robert Murray, chief economist for Dodge Data & Analytics. “Much of the volatility in early 2018 has come from the public works sector, affected by the presence of unusually large project starts during a given month such as what took place in May. In additional, the nonresidential building sector showed resilience in May, bouncing back after a lackluster performance in April.”