Dive Brief:

• The value of construction starts in January rose 12% from December to a seasonally adjusted annual rate of $690.2 billion, the first increase after four straight months of declines, according to Dodge Data & Analytics.
• The nonresidential sector rose 16% in January due largely to the $3.4 billion central terminal at LaGuardia Airport in New York City and other airport projects in San Francisco ($477 million), Seattle-Tacoma ($420 million) and Chicago ($70 million). A $750 million natural gas-fired power plant and two pipelines helped deliver a 44% bounce to nonbuilding, and residential held steady with a 1% uptick.   
• The increase in January starts lifted the Dodge Index to 146, a 16-point bump from December's reading of 130, representing a solid start for 2017, according to Dodge Chief Economist Robert Murray.

Dive Insight:

Murray noted that institutional starts typically trail behind commercial starts, but the 37% increase in institutional — and more specifically the 768% spike in transportation terminal starts — were the primary drivers of the encouraging start figures in January.

Looking deeper into 2017, Murray said commercial growth would likely be limited by a stabilization in vacancy rates and still-tight lending standards. The increase in pipeline projects should give public works a boost this year as long as Congress firms up 2017 appropriations, but the benefits from a potential infrastructure plan from the Trump administration shouldn't impact starts until late this year and moving into 2018.

The Dodge Momentum Index was also up in January, 3.9% from December, due primarily to the institutional sector. That category increased more than 12%, which made up for the 1% drop in commercial planning. Commercial and institutional construction began gathering speed in late 2016 and is expected to continue that growth into this year, with help from a healthy office planning push. The most recent American Institute of Architects Consensus Forecast also predicted somewhat measured nonresidential growth, again, driven by office activity.