May construction starts rise 5 percent
Public works, power plants, multifamily housing show strong gains.
New construction starts jumped 5 percent in May over April, according to Dodge Data & Analytics. A $3.8 billion oil pipeline in the upper Midwest and seven power plant projects with a combined cost of $4.3 billion - the public works and electric utility sector - drove much of the growth.
Residential building edged up slightly in May, with multifamily housing bounced back from its subdued April performance. Nonresidential building in May retreated, for the second month in a row, following a strong March. You can find the Dodge Data & Analytics new release here.
During the first five months of 2016, total construction starts on an unadjusted basis were $256.7 billion, down 12% from the same period a year ago.
The May statistics raised the Dodge Index to 135 (2000=100), up from 129 in April. The Dodge Index had shown moderate improvement during February and March, averaging 141, before slipping back in April.
“The construction start statistics have shown annual increases since 2010, including a 10 percent gain in 2015, although the month-to-month pattern has been frequently uneven,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “The environment for construction still carries a number of positives . . . On the cautionary side, bank lending standards for commercial real estate loans began to tighten during the second half of 2015, and this trend has continued into 2016,”
Nonbuilding construction in May jumped 24 percent to $193.0 billion (annual rate). The public works categories as a group increased 15 percent, helped especially by a 47 percent hike for miscellaneous public works, which includes such diverse project types as pipelines, rail and airport runway projects, and site work.
Residential building, at $272.5 billion (annual rate), improved 1 percent in May. The multifamily side of the housing market provided the upward push, increasing 15 percent.
Nonresidential building in May decreased 6 percent to $171.2 billion (annual rate), marking the second straight monthly decline after the heightened activity in March.
The institutional side of the nonresidential building market held steady in May. The educational facilities category rose a moderate 4 percent.
The 12 percent decline for total construction starts on an unadjusted basis during the first five months of 2016 was due to diminished activity for both nonbuilding construction and nonresidential building, compared to their brisk pace of a year ago.