New construction starts in June advanced 9 percent from the previous month to a seasonally adjusted annual rate of $832.7 billion, according to their latest research. The increase followed the 10 percent gain reported for May, as total construction starts continued to strengthen following April’s subdued performance. By major sector, much of the lift in June came from a 16 percent jump for nonresidential building, which reflected the start of the $1.1 billion expansion to Terminal 5 at Chicago’s O’Hare International Airport, as well as sharp gains for office buildings, public buildings (detention facilities and courthouses), healthcare facilities, and warehouses. The other two major sectors registered moderate growth in June, with nonbuilding construction up 6 percent and residential building up 5 percent. Through the first six months of 2019, total construction starts on an unadjusted basis were $378.8 billion, down 8 percent from the same period a year ago. On a 12-month moving total basis, total construction starts for the 12 months ending June 2019 were 4 percent below the amount for the 12 months ending June 2018.
June’s data raised the Dodge Index to 176 (2000=100), compared to an upwardly revised 161 for May. June’s reading was the highest so far for the Dodge Index during 2019, topping the 175 for March, and coming in slightly above the full year 2018 average for the Dodge Index at 172. On a quarterly basis (which helps to lessen the volatility present in the monthly data), the Dodge Index edged up 1 percent during the second quarter of 2019, helped by the improved activity in May and June after a weak April. This followed a 7 percent decline during this year’s first quarter compared to the final three months of 2018.
Nonresidential building in June was $308.3 billion (annual rate), up 16 percent which followed an 8 percent increase in May. The institutional building categories as a group soared 37 percent in June, helped in particular by a 348 percent jump for new transportation terminal starts. The public buildings category also had a strong June, advancing 242 percent.
Healthcare facilities climbed 22 percent in June, featuring the start of six hospital projects valued each at $100 million or more that were led by the $305 million Altru Hospital in Grand Forks, N.D., and the $245 million University of North Carolina Hospital Surgical Tower in Chapel Hill, N.C. Educational facilities, the largest institutional building category, edged up 1 percent in June as it registered growth for the third straight month. There were four high school buildings valued each at $100 million or more that reached groundbreaking in June. The top five states in terms of the dollar amount of educational facility projects that reached the construction start stage during the first half of 2019 were Texas, California, New York, Massachusetts and Ohio. Decreased activity in June was reported for amusement-related projects, down 7 percent; and religious buildings, down 43 percent.
The commercial side of nonresidential building increased 12 percent in June. The office building category advanced 31 percent, and warehouse construction starts climbed 19 percent. The other commercial building categories experienced decreased activity in June: stores, down 1 percent; commercial garages, down 9 percent; and hotels, down 11 percent. Manufacturing plant construction in June retreated 45 percent from its robust May amount.
Residential building in June was $318.2 billion (annual rate), up 5 percent, which followed a 2 percent gain in May. Multifamily housing registered its strongest amount since last November, advancing 26 percent in June. The pace for multifamily housing was 3 percent above its average monthly pace during 2018. There were 14 multifamily projects valued each at $100 million or more that reached groundbreaking in June, compared to 8 such projects in May. Single-family housing in June slipped 3 percent, receding after a 2 percent gain in May, as this project type has yet to see any sustained growth during the first half of 2019. The pace for single-family housing in June was 6 percent below its average monthly pace during 2018.
The 8 percent slide for total construction starts on an unadjusted basis during the first six months of 2019 was due to reduced activity by each of the three main construction sectors. Nonresidential building fell 10 percent year-to-date, with this pattern by segment: commercial building down 1 percent, institutional building down 7 percent, and manufacturing building down 49 percent. The steep drop for manufacturing building is the result of the comparison to a very strong first half of 2018. If the manufacturing building category is excluded, nonresidential building year-to-date would be down 4 percent. Residential building year-to-date dropped 9 percent, with single-family housing down 7 percent and multifamily housing down 14 percent. Nonbuilding construction year-to-date decreased 5 percent.
On the basis of 12-month moving totals, in this case the 12 months ending June 2019 compared to the 12 months ending June 2018, total construction starts were down 4 percent from the previous period. By major sector, nonresidential building fell 4 percent, with commercial building up 5 percent, institutional building down 6 percent, and manufacturing building down 28 percent. Nonbuilding construction dropped 7 percent, with electric utilities/gas plants up 42 percent and public works down 14 percent. Residential building slipped 2 percent, with 2 percent declines for both single-family and multifamily housing.
