Dive Brief:
- The value of construction starts between April and May increased 5% to a seasonally adjusted annual rate of $636.7 billion, Dodge Data & Analytics reported Friday.
- Despite the second consecutive decline in nonresidential (-6%), both residential (1%) — buoyed by multifamily (15%) — and nonbuilding (24%) starts were up. The latter benefited from the public works sector as well as a $3.8 billion pipeline start and seven large energy projects worth $4.3 billion.
- Total construction starts in the first five months of 2016 (worth $256.7 billion) were down 12% from the same time period last year.
Dive Insight:
January to May 2015 starts included several high-value projects, such as a $90 billion LNG plant in Texas and the $2.5 billion 30 Hudson Yards tower in New York City.
Dodge Data & Analytics Chief Economist Robert Murray said the month-to-month starts pattern continued to be "uneven," but overall starts have still logged annual increases since 2010. He said that fewer starts in the last half of 2015, when compared with the "exceptionally large projects" that began in the first part of last year, should provide a more favorable year-to-date comparison as 2016 continues.
He added that — aside from a pullback on commercial real estate loans — long-term low interest rates, multiple financing sources for the commercial sector, state construction bond measures and the new transportation bill have all created a positive environment for growth in the construction industry.
However, construction spending fell 1.8% in April to a seasonally adjusted annual rate of $1.13 trillion, and housing starts fell 0.3% in May. On the positive side, the Dodge Momentum Index ticked up 2.4% in May to 119.4, and the Architectural Billings Index increased to 53.1 in May from 50.6 in April.
