Dodge Data: Construction starts skyrocket 21% in August

Dive Brief:

The value of construction starts between July and August shot up 21% to a seasonally adjusted annual rate of $711.2 billion, a significant turnaround from July's decline, Dodge Data & Analytics reported Thursday.
Dodge attributed nonresidential's commercial (31%) and nonbuilding's public works (326%) categories with the increase, as both saw construction of megaprojects get underway last month.
Year-to-date starts were down 7% to $439.3 billion from the same period in 2015. Dodge said that the massive projects started in the first half of 2015 were excluded from its calculations, the year-to-date fall in starts would be only 1%.

Dive Insight:

The steep rise in August starts pushed the Dodge Index to 150, up from its July reading of 124. Dodge Data & Analytics Chief Economist Robert A. Murray said in a release that August's impressive performance will likely translate into third-quarter "moderate growth," proving that "the industry still has room for further expansion."

He also noted that large projects have been responsible for the up-and-down trend in recent monthly start figures. In the nonresidential sector, some of these projects are a Louisiana petrochemical plant ($3 billion), the Wynn casino complex ($1.7 billion) near Boston, and the Seattle-Tacoma International Airport renovation ($508 million). Nonbuilding's standout projects include a Southeastern gas pipeline ($3 billion).

Overall, the nonresidential sector jumped 42% to an annual rate of $267.4 billion, the highest amount for nonresidential since spring of 2015. Nonbuilding starts increased 25%, and, aside from the startling triple-digit increase in public works projects, highway bridge starts were up 5%. Multifamily (25%) was the driver behind the residential sector's 5% rise in August starts, which included the Vista Tower in Chicago. Overall, single-family starts lost 2%, with all regions down except the South (2%) and Northeast (2%).

This week, ConstructConnect issued its own nonresidential starts report , which showed the value of nonresidential construction starts dropping 2% to $33.8 billion in August but up 11.4% year over year and 12.3% year to date. The Dodge Data report includes residential and nonbuilding construction. Earlier this month, the Commerce Department reported that July nonresidential spending reached an all-time high of $429.5 billion (seasonally adjusted), a result of increased office and shopping center construction.