January Construction Starts Up 2% From December, Down Year-Over-Year

New construction volume climbed 2% in January to a $607.9-billion seasonally adjusted annual rate, with all the gains coming in the residential sector, Dodge Data & Analytics says.

Dodge D&A’s latest monthly construction-starts report, released on Feb. 19, also showed that the estimated value of projects that broke ground last month fell 14% from the year-earlier level, though comparisons were skewed by two huge liquefied-natural-gas complexes that got underway in January 2015.

Using another yardstick, for the 12 months ended in January 2016, overall construction starts increased 6% from results for the same span 12 months earlier, Dodge said.

Among the month-to-month comparisons, residential construction was up 5% in January, to a rate of $294 billion, Dodge said. It also noted that non-residential projects edged down 1%, to a $180.3-billion rate, and non-building projects declined 2%, to a $133.7-billion rate.

The Dodge Index moved up in January to 129 from December’s revised 127 figure. The year 2000 level equals 100 for the index.

Robert A. Murray, Dodge D&A’s chief economist, said in a statement that the January data indicate that construction “seems to be gradually regaining upward momentum.” He noted that starts were up “at a healthy clip” in last year’s first half, fell 20% in the third quarter and increased a modest 1% in the last quarter.

In January, single-family housing’s 6% increase contributed to the residential sector’s uptick, and multifamily projects contributed a 2% gain.

Within the non-residential category, institutional facilities fell 10%, but commercial buildings rose 3%, thanks in part to a 29% jump in office buildings, a 59% surge in manufacturing projects and smaller, double-digit percentage increases in warehouses and hotels.

Among non-building segments, electric utility and gas plants tumbled 18%. Public works moved up 1%, benefiting from a 19% gain in highway and bridge projects and a 68% increase in the sewer/hazardous-waste category, Dodge reported. But water supply, river-harbor and miscellaneous public works were down significantly.

Looking ahead, Murray sees positive indicators, including low long-term interest rates, occupancy and rent levels and, for public works, the recently enacted five-year transportation measure and fiscal 2016 federal appropriations.

On the other hand, he notes, the worldwide economy is “struggling,” and energy prices and the stock market are down. Murray said those factors “have raised the degree of uncertainty in the economic environment, which may contribute to a more restrained approach toward investment in the near term.”

In year-to-year comparisons, Dodge said residential starts rose 13%, but non-residential volume was off 5%. The non-building sector plummeted 45% from January 2015, when two major LNG projects broke ground in Texas.

Engineering News-Record and Dodge both were owned by McGraw Hill Financial and its predecessor companies for several decades. ENR was acquired by BNP Media in 2015.

Source: Engineering News Record