New York, New York (June 20, 2019)—At a seasonally adjusted annual rate of $757.0 billion, new construction starts in May climbed 10% from April, according to Dodge Data & Analytics. The increase continues the double-digit swings that were reported during the previous 2 months, when a 16% hike for total construction starts in March was followed by a 15% decline in April.
Each of the three main construction sectors contributed to May’s 10% gain. Nonbuilding construction rebounded 32% after depressed activity in April, lifted by an especially strong amount of new power plant starts and an $800 million light rail project in the Minneapolis, Minnesota, area. Nonresidential building improved 7%, supported by groundbreaking for two very large manufacturing plant projects. Residential building edged up 2%, with modest gains for both single-family housing and multifamily housing.
Through the first 5 months of 2019, total construction starts on an unadjusted basis were $295.0 billion, down 9% from the same period a year ago. On a 12-month, moving total basis, total construction starts for the 12 months ending May 2019 were 2% below the amount reported for the 12 months ending May 2018.
The May statistics raised the Dodge Index to 160 (2000=100), up from April’s 145. May’s reading was still less than the 172 reported in March, as well as the full year 2018 average for the Dodge Index at 171.
“The presence of very large projects frequently causes volatility in the month-to-month pattern of construction starts, and that’s certainly been the case during March, April, and now May,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “Amidst the volatility, the pace of construction starts has on balance been sluggish so far in 2019, as activity has been generally lower than the healthy volume witnessed during the first half of last year. For public works, there was some dampening in early 2019 arising from the partial government shutdown, although highway and bridge construction has shown improvement in recent months.”
“For nonresidential building, the boost coming from very large projects so far this year has not been of the same magnitude as what took place last year. For residential building, multifamily housing has pulled back from last year’s strength, while single family housing has been essentially flat. At the same time, there are still positive factors in the current environment affecting construction.”
“Federal appropriations for fiscal 2019 are in place, and funding support is coming from the state and local bond measures passed in recent years. Market fundamentals for commercial building and multifamily housing strengthened during 2018 and early 2019, while interest rates remain low. As 2019 proceeds, it’s expected that the shortfall between this year’s level of construction starts compared to last year will narrow.”
Additional insight is made possible by looking at 12-month moving totals, in this case the 12 months ending May 2019 versus the 12 months ending May 2018. On this basis, total construction starts were down 2% from the previous period. By major sector, nonresidential building increased 4%, with manufacturing building up 21%, commercial building up 8%, and institutional building down 3%. Residential building dropped 2%, with single-family housing down 2% and multifamily housing down 1%. Nonbuilding construction fell 10%, with public works down 14%, while electric utilities/gas plants increased 16%.
May 2019 Construction Starts
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