Dive Brief:
- The value of March construction starts increased 5% from February to a seasonally adjusted annual rate of $743.7 billion, the third-straight monthly increase, according to Dodge Data & Analytics.
- Once again, the primary driver of starts last month was the nonbuilding category (+16%) of public works, which increased largely because of two major pipeline projects worth almost $7 billion total. Residential also got a 4% bump from a rise in multifamily construction, and the overall nonresidential category stayed virtually unchanged but saw large airport terminal starts, as well as a 41% uptick in office construction.
- Total construction starts were up 2% year over year but fell 3% for the January-to-March period when compared to the same period a year ago. From February, the Dodge Index skipped ahead eight points to 157, a 22% increase from December's reading of 129 and a quarter-to-quarter increase of 9%.
Dive Insight:
Strong activity in the first quarter of 2017 is a sign that the construction industry is still undergoing an expansion, according to Dodge Chief Economist Robert Murray. In the coming year, he said he expects the institutional sector to see further growth in school construction, but activity in the public works segment will depend largely on spending decisions made by Congress.
March benefited from the starts of several high-profile projects, including the approximately $1 billion Midfield Satellite Concourse at Los Angeles International Airport, the near-$300 million LG headquarters in Englewood Cliffs, NJ, and the $398 million Pensacola Bay Bridge in Pensacola, FL.
These projects, however, pale in comparison to the potential $1 trillion infrastructure spending program that could come online in the next few years if the new administration fulfills its promises. President Donald Trump campaigned on this private equity-backed initiative during his campaign last year, and he has positioned some former business associates, including billionaire Richard LeFrak, to sit on his infrastructure task force. As a potential sign of an imminent push, the Department of Transportation did some reshuffling of some top agency positions last week in order to better support a large-scale infrastructure agenda.
March's Dodge Momentum Index marked its sixth-consecutive monthly increase, driven by 3.7% growth in nonresidential planning in the industrial sector. In addition, the number of commercial and institutional projects in the planning stages doubled.
