New Construction Starts in April Slide 8 Percent

NEW YORK, New York – The value of new construction starts in April fell 8 percent from the previous month to a seasonally adjusted annual rate of $608.3 billion, according to Dodge Data & Analytics. Nonresidential building pulled back following its sharp March increase and the non-building construction sector showed improvement, with public works strengthening after its lackluster March performance. Through the first four months of 2016, total construction starts on an unadjusted basis were reported at $198.4 billion, down 12 percent from the same month a year ago. The first four months of 2015 had been lifted by several exceptionally large projects, including three liquefied natural gas terminals with a total value of $15.4 billion and three large petrochemical plants with a total value of $11.9 billion, which substantially increased last year’s January-April amounts for the electric utility/gas plant and manufacturing building categories. If the electric utility/gas plant and manufacturing building categories are excluded, total construction starts during the first four months of 2016 would be down a modest 4 percent from a year ago.

April’s data lowered the Dodge Index to 129 (2000=100), compared to 140 for March. The Dodge Index had registered improved activity during February and March, averaging 141. April’s decline returned the pace of construction starts to what was reported during the July 2015-January 2016 period, when the Dodge Index averaged 129.

Nonresidential building in April dropped 19 percent to $185.1 billion (annual rate). This follows the 26 percent hike reported for March, which included the start of several large transportation terminal projects plus several large hotel and casino projects. The institutional side of the nonresidential building market fell 24 percent in April after surging 50 percent in March, with widespread declines for its individual structure types. Most notable was an 86 percent plunge for the transportation terminal category. Healthcare facilities in April dropped 10 percent after soaring 57 percent in March, while the public buildings category retreated 16 percent after its 48 percent March rise. The amusement category settled back 8 percent in April, after climbing 39 percent in March with the push coming from the $284 million casino portion of the Montreign Resort and Casino in Kiamesha Lake, New York. Educational facilities, the largest institutional category, had a relatively small 3 percent drop in April after climbing 21 percent in March. The depressed religious building category ran counter to the broad pullback for institutional building, as it climbed 10 percent in April.

The commercial building categories as a group fell 18 percent in April, following a 5 percent gain in March. Hotel construction dropped 49 percent after its 47 percent March jump, which reflected the $332-million hotel portion of the Montreign Hotel and Casino in Kiamesha Lake, New York. On the plus side, growth was reported in April for warehouses, up 15 percent; and office buildings, up 8 percent. Large office projects that reached groundbreaking in April were the $232 million addition to the Fannie Mae office building in Washington, D.C., the $223-million CNA Financial headquarters office tower in Chicago, Illinois and the $200-million NCR headquarters office building in Atlanta, Georgia. The manufacturing plant category in April rose 19 percent, supported by the $717 million expansion to an alpha olefins plant in Louisiana.

Non-building construction in March advanced 10 percent to $154.1 billion (annual rate), with public works up 39 percent while electric utilities/gas plants fell 36 percent. Highway and bridge construction climbed 13 percent following subdued activity in March, lifted by the April start of the $581-million Bergstrom Expressway project in Austin, Texas and the $209-million Interstate 59/20 interchange modifications in Birmingham, Alabama. The miscellaneous public works category in April soared 180 percent, and included two site work projects valued at $365 million each for the Star Wars-themed parks at Disneyland in Anaheim, California and Walt Disney World in Orlando, Florida. With regard to environmental public works, water supply construction surged 85 percent in April, reflecting the start of a $707-million water tunnel repair project located in New York’s Dutchess, Orange and Putnam counties. The other two environmental public works categories, river/harbor development and sewer construction, each fell 24 percent in April. The 36 percent decline for the electric power/gas plant category in April continued its retreat from a very strong amount at the outset of 2016.

The 12 percent slide for total construction start on an unadjusted basis during the first four months of 2016 came as the result of sizeable declines for both nonresidential building and non-building construction, relative to their particularly heightened activity a year ago. For both sectors, the year-to-date comparisons should strengthen as 2016 proceeds. Nonresidential building fell 21 percent in this year’s January-April period, with manufacturing building down 72 percent, the institutional building segment down 10 percent, and the commercial building segment down 4 percent.

Non-building construction dropped 25 percent year-to-date, with public works down 23 percent and electric utilities/gas plants down 28 percent. By major region, total construction starts for the first four months of 2016 revealed these comparisons to last year – the South Central, down 34 percent; the Midwest, down 7 percent; the Northeast, down 4 percent; the South Atlantic, unchanged; and the West, up 2 percent.

Added perspective is made possible by looking at twelve-month moving totals, in this case the twelve months ending April 2016 versus the twelve months ending April 2015. On this basis, total construction starts are down 3 percent, due to this performance by major sector – nonresidential building, down 17 percent; residential building, up 12 percent and non-building construction, down 7 percent.