New Construction Starts in June Drop 7 Percent

NEW YORK, N.Y. – New construction starts in June decreased 7 percent from the previous month to a seasonally adjusted annual rate of $595.1 billion, according to Dodge Data & Analytics. The non-building construction sector (public works and electric utilities) fell sharply after being lifted in May by the start of a $3.8 billion oil pipeline in the upper Midwest and seven large power plant projects totaling $4.3 billion. Residential building in June edged down with reduced activity reported for both single family and multifamily housing. At the same time, nonresidential building registered moderate growth in June after sliding back in April and May. Through the first six months of 2016, total construction starts on an unadjusted basis were $318.1 billion, down 11 percent from the same period a year ago. The January-June period of 2015 included 13 exceptionally large projects valued each at $1 billion or more, including a $9-billion liquefied natural gas export terminal in Texas, an $8.5-billion petrochemical plant in Louisiana and two massive office towers in New York, New York– the $2.5-billion 30 Hudson Yards and the $1.2-billion One Manhattan West. In contrast, the January-June period of 2016 included only four projects valued at $1 billion or more. If these exceptionally large projects are excluded, total construction starts during the first half of 2016 would be down a slight 2 percent from last year.

June’s data lowered the Dodge Index to 126 (2000=100), compared to 135 in May. After strengthening in this year’s first quarter, the Dodge Index fluctuated in the second quarter, rebounding in May after April’s decline, followed by another decline in June. “The construction start statistics on a monthly basis continue to show an up-and-down pattern,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “This has often been due to the presence or absence of very large projects for a given month, which most recently applies to the May and June behavior for public works and electric utilities.”

The 11 percent drop for total construction starts on an unadjusted basis during the January-June period of 2016 reflected reduced activity for both non-building construction and nonresidential building, relative to their elevated pace of a year ago. Non-building construction fell 22 percent year-to-date, with public works down 15 percent and electric utilities/gas plants down 33 percent. Nonresidential building fell 19 percent year-to-date, with commercial building down 7 percent, institutional building down 12 percent and manufacturing building down 70 percent. Residential building continues to be the one major sector that’s advancing year-to-date, rising 4 percent, with an 8 percent gain for single-family housing outweighing a 4 percent decline for multifamily housing. By geography, total construction starts during the first six months of 2016 showed this pattern compared to last year – the South Central, down 32 percent; the Northeast, down 11 percent; the West, down 3 percent; the South Atlantic, down 1 percent and the Midwest, up 5 percent.