Dive Brief:
- The value of construction starts slid 8% between March and April to a seasonally adjusted annual rate of $608.3 billion, Dodge Data & Analytics reported Wednesday.
- Starts in both the residential and nonresidential sectors declined last month, with residential's loss due largely to a slowdown in multifamily construction. Nonbuilding construction rose in April with a boost in the public works segment.
- Total construction starts in the first four months of 2016 reached $198.4 billion — 12% lower than the same period last year. However, starts at the beginning of 2015 were unusually high due to construction on major LNG terminals and petrochemical plants.
Dive Insight:
Dodge Data & Analytics Chief Economist Robert Murray said month-to-month volatility in the value of construction starts is common and "not a surprise."
He said the institutional segment of nonresidential construction last month was higher than predicted and signals strong growth to come in that sector. On the other hand, the commercial segment's prospects, while still indicating a positive direction, have become "tenuous" due to some banks tightening of lending standards, according to Murray.
He added in a release that residential building "is still deriving some benefit from this year's low interest rate environment, and increased funding under the new federal transportation act should provide support for the public works sector."
The construction starts report throws a negative twist into the mostly positive industry reports this month. Construction spending rose 0.3% last month, and the Dodge Momentum Index increased 0.6%. On the residential side, housing starts grew 6.6% with a surge in multifamily construction.
