August Construction Starts Jump 21 Percent

NEW YORK, N.Y. – New construction starts in August soared 21 percent to a seasonally adjusted annual rate of $711.2 billion, according to Dodge Data & Analytics, following lackluster activity in July. The August rise for total construction starts featured an especially elevated amount for nonresidential building, which was helped by the start of a $3-billion petrochemical plant in Louisiana, the $1.7-billion Wynn Casino in the Boston, Massachusetts area and a $508-million terminal upgrade at Seattle-Tacoma International Airport. The non-building construction sector also experienced strong growth, with its public works segment lifted by the start of a $3-billion natural gas pipeline project in the states of Alabama, Georgia and Florida. In addition, residential building contributed with a moderate August gain, reflecting another advance for multifamily housing which included groundbreaking for the $900-million Wanda Vista Tower in Chicago, Illinois. Through the first eight months of 2016, total construction starts on an unadjusted basis were $439.3 billion, down 7 percent from a year ago.

As 2016 is proceeding, the year-to-date decline for total construction is becoming smaller, affected to a lesser extent by the comparison to the massive projects reported during the first half of 2015 and now benefitting from the start of several massive projects in this year’s second half. If projects valued at $1 billion or more are excluded, total construction starts during the first eight months of 2016 would be down a slight 1 percent, or essentially even, with a year ago.

The August data raised the Dodge Index to 150 (2000=100), up from 124 in July. The quarterly averages for the Dodge Index show that construction activity increased 11 percent in this year’s first quarter to 146, followed by a 10 percent decline in the second quarter to 131. The July and August average for the Dodge Index comes to 137, a 4 percent gain relative to the second quarter. “

Nonresidential building in August surged 42 percent to $267.4 billion (annual rate), rising from the subdued activity reported during the previous four months and reaching the highest amount since April 2015. Non-building construction, at $152.7 billion (annual rate), increased 25 percent in August. Residential building in August advanced 5 percent to $291.1 billion (annual rate).

The 7 percent drop for total construction starts on an unadjusted basis during the first eight months of 2016 was the result of declines for both non-building construction and nonresidential building compared to a year ago. Non-building construction fell 17 percent year-to-date, with public works down 8 percent and electric utilities/gas plants down 34 percent. Nonresidential building decreased 10 percent year-to-date, with commercial building down 1 percent, institutional building down 8 percent and manufacturing building down 45 percent. Residential building continued to be the one major sector reporting a year-to-date gain, increasing 3 percent with single family housing up 7 percent while multifamily housing receded 4 percent. By major region, total construction starts during the first eight months of 2016 showed this performance compared to a year ago – the Midwest, up 5 percent; the South Atlantic, up 4 percent; the West, unchanged; the Northeast, down 12 percent and the South Central, down 25 percent.