May 2017 construction starts increase 1 percent

By |  June 21, 2017

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New construction starts in May increased 1 percent from April to a seasonally adjusted annual rate of $651.2 billion, reports Dodge Data & Analytics. The May statistics produced a reading of 138 for the Dodge Momentum Index, which is up from the 137 reading in April.

Nonbuilding construction in May was up 23 percent at $146.9 billion. The public works categories as a group rose 30 percent and the miscellaneous public works category rose 166 percent. In addition, highway and bridge construction grew 5 percent, river and harbor development fell 5 percent, water supply construction fell 9 percent and sewer construction fell 11 percent. Finally, the electric utility and gas plant category dropped 3 percent.

Nonresidential building in May fell 4 percent at an annual rate of $219.3 billion. The commercial categories as a group fell 10 percent, with office construction falling 40 percent. In addition, warehouse construction increased 17 percent, store construction increased 16 percent and hotel construction increased 11 percent. The commercial garage category rose 7 percent and manufacturing plant construction surged 22 percent in May, as well.

The institutional side of the nonresidential building market also fell 4 percent in May. Educational facilities dropped 21 percent, religious buildings dropped 10 percent and the amusement category dropped 36 percent. Despite this, healthcare facilities rose 38 percent, the public buildings category rose 51 percent and the transportation terminal category rose 23 percent.

Residential building in May fell 4 percent to an annual rate of $284.9 billion. Multifamily housing retreated 10 percent and single-family housing fell 2 percent.

According to Dodge Data & Analytics, the decline for total construction starts on an unadjusted basis during the first five months of 2017 was due to a varied pattern by major sector. Nonbuilding construction fell 25 percent year-to-date, nonresidential building grew 5 percent year-to-date and residential building remained flat year-to-date.

When comparing 12-month totals – the 12 months ending May 2017 versus the 12 months ending May 2016 – total construction starts were up 3 percent, with nonbuilding construction falling 12 percent, nonresidential building increasing 14 percent and residential building growing 3 percent.

“While May revealed slight improvement over April, the pace of expansion so far this spring has generally slowed following the elevated activity in the first quarter,” says Robert Murray, chief economist for Dodge Data & Analytics. “This is consistent with the up-and-down behavior that’s often been present in the current expansion, and a continuation of this pattern means that renewed strengthening can be expected in the months ahead.”

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