January Construction Starts Jump 12 Percent

NEW YORK, N.Y. – The value of new construction starts in January climbed 12 percent to a seasonally adjusted annual rate of $690.2 billion, according to Dodge Data & Analytics. After losing momentum during last year’s fourth quarter, nonresidential building strengthened in January, with much of the lift coming from the start of the $3.4-billion Central Terminal Building at LaGuardia Airport in New York, New York,as well as groundbreaking for several other large airport terminal projects. Nonbuilding construction bounced back from a subdued December, with the boost arising from a $750-million natural gas-fired power plant in Florida plus two pipeline projects – the $900-million Plains Diamond oil pipeline in Arkansas and Oklahoma, and the $767-million Presidio Crossing natural gas pipeline in Texas. Meanwhile, residential building edged upward in January as the result of a slight gain for single-family housing. On an unadjusted basis, total construction starts in January were reported at $48.5 billion, down 3 percent from the same month a year ago which included especially strong amounts for the often volatile manufacturing plant and electric utility/gas plant categories. If manufacturing plants and electric utilities/gas plants are excluded, total construction starts in January would be up 10 percent from last year’s corresponding volume.

The January statistics raised the Dodge Index to 146 (2000=100), compared to 130 in December. The Dodge Index reached its 2016 peak in August at 156, and held close to that level in September at 153. The next three months showed the Dodge Index retreating 5 percent to 6 percent each month, culminating in December’s 130. For the full year 2016, the Dodge Index averaged 144.

Nonresidential building in January climbed 16 percent to $261.5 billion (annual rate), following lackluster activity in December. The commercial side of the nonresidential building market grew 12 percent in January. Office construction starts climbed 26 percent, and featured the start of two large data centers – a $600-million data center in McClellan, California and a $395-million data center in Sterling, Virginia.

Nonbuilding construction, at $121.1 billion (annual rate), rebounded 44 percent in January after plunging 40 percent in December. The electric utility/gas plant category surged 285 percent following extremely low activity in December, lifted by the January start of a $750-million natural gas-fired power plant in Florida. January’s amount for this category was still weak by recent standards, coming in 65 percent below the average monthly pace for electric utilities/gas plants during 2016.

Residential building in January increased 1 percent to $307.6 billion (annual rate), basically maintaining the improved level achieved in December with an 8 percent gain. Single-family housing in January grew 1 percent, due to this pattern by major region – the Midwest, up 13 percent; the Northeast, up 7 percent; the South Atlantic and South Central, each up 2 percent; and the West, down 10 percent. Multifamily housing in January held steady with its December amount. There were 13 multifamily projects valued at $100 million or more that reached groundbreaking in January, similar to the 14 such projects in December.

The 3 percent decline for total construction starts on an unadjusted basis for January 2017 relative to January 2016 was the result of a varied performance by major sector. Nonresidential building advanced 27 percent, with institutional building up 74 percent, commercial building, up 14 percent and manufacturing building down 72 percent. Residential building rose 1 percent, with single-family housing up 7 percent and multifamily housing down 10 percent. Nonbuilding construction fell 37 percent, with public works down 14 percent and electric utilities/gas plants down 77 percent. By geography, total construction starts for January 2017 relative to January 2016 revealed this pattern – the Northeast, up 22 percent; the West, up 21 percent; the South Atlantic, down 8 percent; the Midwest, down 14 percent; and the South Central, down 24 percent.

Useful perspective is made possible by looking at 12-month moving totals, in this case the twelve months ending January 2017 versus the twelve months ending January 2016, which lessens the volatility present in one-month comparisons. For the 12 months ending January 2017, total construction starts were up 1 percent. By major sector, nonresidential building grew 5 percent, with commercial building up 12 percent, institutional building up 10 percent and manufacturing building down 36 percent. Residential building also grew 5 percent, with single-family housing up 8 percent and multifamily housing down 1 percent. Nonbuilding construction dropped 12 percent, with public works down 6 percent and electric utilities/gas plants down 26 percent.