New construction starts slip in December, advance in 2016

By |  January 25, 2017
Click to enlarge.

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New construction starts in December fell 5 percent to a seasonally adjusted annual rate of $613 billion with a reading of 130 for the Dodge Index, reports Dodge Data & Analytics. The decline for December can mainly be attributed to reduced activity for the nonbuilding sector.

Nonresidential building in December was reported at $224 billion, which remained almost the same as November. The manufacturing plant category jumped 124 percent, the commercial categories as a group increased 11 percent and hotel construction rose 74 percent. In addition, office construction in December increased 25 percent, commercial garages rose 13 percent and stores rose 8 percent. Despite these increases, warehouse construction fell 25 percent in December.

The institutional building categories as a group dropped 17 percent in December, with amusement-related construction down 70 percent, public buildings down 17 percent and healthcare facilities down 12 percent. The educational facilities category increased 34 percent and the religious building category rose 87 percent.

Residential building in December climbed 9 percent to $306.9 billion, with multifamily housing up 26 percent and single-family housing up 4 percent.

Finally, nonbuilding construction in December fell 41 percent to $82 billion, with the electric utility/gas plant category falling 89 percent and miscellaneous public works falling 47 percent. In addition, sewer construction fell 8 percent, highways and bridges fell 10 percent, and river/harbor development fell 74 percent. Despite this, water supply construction advanced 53 percent.

Despite December’s decrease in construction starts, total construction starts for all of 2016 advanced 1 percent to $676.5 billion, which was a considerably smaller gain compared to the 11 percent increase reported for 2015, according to Dodge Data. For the full year of 2016, the Dodge Index averaged 143.

In addition, nonresidential building in 2016 advanced 4 percent to $227.7 billion; the commercial categories group rose 11 percent; and the institutional categories group increased 4 percent. Residential building in 2016 advanced 6 percent to $287 billion, but nonbuilding construction dropped 11 percent to $161.8 billion.

“The construction start statistics over the course of 2016 revealed a varied pattern, with the end result being a slight gain for the year as a whole,” says Robert Murray, chief economist for Dodge Data & Analytics. “On a quarterly basis, growth was reported during the first and third quarters, while activity settled back during the second and fourth quarters. On the plus side for 2016, commercial building continued to rise, and institutional building provided evidence that it was beginning to regain upward momentum after pausing in 2015.”

Murray also offered his projection for 2017, revealing that more growth at a moderate pace is expected for total construction.

Allison Barwacz

About the Author:

Allison Barwacz is the digital media manager for North Coast Media (NCM). She completed her undergraduate degree at Ohio University where she received a Bachelor of Science in magazine journalism from the E.W. Scripps School of Journalism. She works across a number of digital platforms, which include creating e-newsletters, writing articles and posting across social media sites. She also creates content for NCM's Portable Plants magazine, GPS World magazine and Geospatial Solutions. Her understanding of the ever-changing digital media world allows her to quickly grasp what a target audience desires and create content that is appealing and relevant for any client across any platform.

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