Equipment Type

New Construction Starts Rise 5 Percent in May

Strong gains reported for public works, power plants, and multifamily housing

June 27, 2016

At a seasonally adjusted annual rate of $636.7 billion, new construction starts in May increased 5 percent  from April, according to Dodge Data & Analytics.

Nonbuilding construction  - April to May: Up  24 percent to $193.0 billion.

  • Public works - up 15 percent (helped 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.)
  • River/harbor development -  up 81 percent
  • Sewer construction -  up 42 percent
  • Water supply construction -  down 40 percent
  • Highway and bridge construction -  up 1 percent
  • Electric power and gas plant construction - up 57 percent

Residential building - April to May:  Up 1 percent to $272.5 billion

  • Multifamily -  up 15 percent
  • Single family - down 4 percent
  • By major region: Midwest, down 7 percent; the South Atlantic, down 6 percent; the West, down 4 percent; the South Central, no change, and the Northeast, up 3 percent.

Nonresidential building - April to May: Down  6 percent to $171.2 billion

  • Hotel construction - down 22 percent.
  • Office construction - down 11 percent
  • Stores - down 1 percent
  • Warehouses - down percent
  • Manufacturing plant - down 37 percent  (following April’s 38 percent hike that included the $717 million expansion to an alpha olefins plant in Louisiana.)
  • Educational facilities - up 4 percent
  • Church construction - up 6 percent
  • Public buildings (courthouses and detention facilities) - up 9 percent
  • Transportation terminal work - down 9 percent
  • Amusement-related construction - down 13 percent

Leading metropolitan areas

Through the first five months of 2016, New York NY continued to be the leading metropolitan area in terms of the dollar amount of multifamily starts, followed by Miami FL, Chicago IL, Boston MA, and Los Angeles CA. However, nonresidential building in May retreated, sliding for the second month in a row after the elevated activity reported in March.

Year to Year comparison

During the first five months of 2016, total construction starts on an unadjusted basis were $256.7 billion, down 12 percent from the same period a year ago. However, last year’s January-May period featured 12 exceptionally large projects valued each at $1 billion or more.

NOTE: The January-May period of 2016 included only four projects valued at $1 billion or more. If these exceptionally large projects are excluded from the comparison, total construction starts during the first five months of 2016 would be down 0.3 percent, or essentially even, with last year.

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.

 Nonbuilding construction dropped 24 percent year-to-date, with public works down 13 percent and electric utilities/gas plants down 39 percent.

Nonresidential building fell 21 percent year-to-date, with commercial building down 7 percent, institutional building down 12 percent, and manufacturing building down 70 percent.

Residential building continues to be the one major sector that’s showing year-to-date growth, climbing 6 percent with single family housing up 9 percent and multifamily housing holding steady with the prior year.

By geography, total construction starts during the first five months of 2016 revealed a mixed pattern – the South Central, down 36 percent; the Northeast, down 8 percent; the West, down 2 percent; the South Atlantic, no change; and the Midwest, up 7 percent.

The May statistics raised the Dodge Index to 135 (2000=100), up from 129 in April.

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