January construction starts show improvement

New construction starts in January grew 2 percent to a seasonally adjusted annual rate of $607.9 billion, raising the Dodge Index to 129, according to Dodge Data & Analytics.

Residential building in January rose 5 percent to $294 billion. This increase is mainly due to a 6 percent gain in single-family housing. Multifamily housing also rose 2 percent, with nine multifamily projects valued at $100 million or more that reached the groundbreaking stage in January.

Nonresidential building slipped 1 percent to $180.3 billion, with the institutional categories group decreasing 10 percent and healthcare facilities dropping 20 percent. The small institutional categories all registered weak activity, with public buildings down 5 percent, transportation terminals and religious buildings each down 35 percent, and amusement-related work down 49 percent.

The commercial building categories as a group increased 3 percent in January, with office construction leading the gain with a 29 percent increase. Warehouse construction increased 17 percent, hotel construction grew 14 percent and the manufacturing plant category jumped 59 percent.

Nonbuilding construction dropped 2 percent to $133.7 billion. The electric utility and gas plant category fell 18 percent and the public works categories as a group increased 1 percent. The other public works categories also experienced decreased activity, with water supply construction down 19 percent, river/harbor development down 30 percent and miscellaneous public works, including site work, mass transit and pipelines down 32 percent.

Compared to January 2015, total construction starts in January 2016 were down 14 percent. According to Dodge Data & Analytics, this is the result of performance per sector, as residential building increased 13 percent, nonresidential building decreased 5 percent and nonbuilding construction fell 45 percent in January 2016.

“The construction industry, as shown by the construction start statistics, seems to be gradually regaining upward momentum,” says Robert Murray, chief economist for Dodge Data & Analytics. “Last year construction activity proceeded at a healthy clip during the first half, followed by a 20 percent drop in the third quarter, and then a slight 1 percent rebound in the fourth quarter. January’s modest gain for construction starts is consistent with what was shown at the end of last year.”