New Construction Starts Up Again: 10 Percent Advance in April
Through the first four months of 2015, total construction starts on an unadjusted basis were reported at $208.2 billion, up 24 percent from the same period a year ago.
In April, the value of new construction starts increased 10 percent from the previous month to a seasonally adjusted annual rate of $698.7 billion, according to Dodge Data & Analytics. The nonresidential building sector came in particularly strong. Meanwhile, residential building slipped in April, and nonbuilding construction lost momentum as the result of a pullback by public works.
The April statistics raised the Dodge Index to 148 (2000=100), compared to 134 in March. For the full year 2014 the Dodge Index averaged 124.
“The presence of unusually large projects in early 2015, particularly several liquefied natural gas terminals and several petrochemical plants, has elevated the level of activity shown by total construction starts beyond the underlying trend,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “It’s also increased the volatility on a month-to-month basis, with total construction up 16 percent in February, down 13 percent in March, and now up 10 percent in April. Despite these wide swings on a monthly basis, it’s still possible to identify several aspects of how the construction expansion is proceeding in 2015. For nonresidential building, the upturn is broadening in scope, with its institutional segment continuing the upward movement established in 2014. For residential building, single-family housing has shown some improvement yet remains hesitant, while multifamily housing is generally proceeding at a healthy clip.”
Nonresidential building in April jumped 58 percent to $288.9 billion (annual rate). Much of the lift came from the manufacturing plant category, which soared 516 percent, due to an $8.1 billion massive project, which, if excluded, the manufacturing plant category in April would have been down 34 percent, while total nonresidential building would have seen a more moderate increase of 5 percent. The commercial building group in April grew 11 percent, rebounding after a 10 percent decline in March. The office building category surged 50 percent. Store construction in April improved 2 percent; warehouse construction in April climbed 17 percent after a weak March; but hotel construction dropped 23 percent.
The institutional building group in April grew 7 percent, bouncing back after an 8 percent slide in March. Educational facilities increased 9 percent. Healthcare facilities advanced 18 percent after a weak March; and the amusement and recreational category registered a 15 percent gain in April. Losing momentum in April were public buildings (courthouses and detention facilities), down 21 percent; and religious buildings, down 57 percent.
Residential building, at $245.1 billion (annual rate), slipped 3 percent in April. Single-family housing retreated 4 percent following its slight gain in March, still holding to the sluggish performance that took hold at the end of 2013. Multifamily housing in April eased back 2 percent, retreating slightly for the second straight month after a 40 percent surge in February.
The 24 percent increase for total construction starts on an unadjusted basis during the first four months of 2015 was the result of growth for all three major construction sectors. Nonresidential building year-to-date advanced 12 percent, with manufacturing building up 40 percent, institutional building up 8 percent, and commercial building up 2 percent. Residential building year-to-date was also up 12 percent, with multifamily housing up 15 percent and single-family housing up 11 percent.
Useful insight comes from looking at 12-month moving totals, in this case the 12 months ending April 2015 versus the 12 months ending April 2014. On this basis, total construction starts were up 13 percent, as a result of this behavior by major sector: nonresidential building, up 19 percent; residential building, up 11 percent; and nonbuilding construction, up 8 percent.