Dodge Data & Analytics, New York, has reported construction starts increased 11 percent in June. Total construction starts in June were up 1 percent compared with June 2017.
"The monthly pattern for construction starts will often reflect the presence or absence of very large projects, and after May received a lift from unusually large projects, it was even more true in June," says Robert A. Murray, chief economist for Dodge Data & Analytics. "Following the lackluster activity in April, the strength shown during May and June enabled the second quarter average for total construction starts to be up 3 percent from the first quarter, which itself was up 2 percent from the final three months of 2017. On that basis, one can say that the expansion for construction starts continued at a modest pace during the first half of 2018. At the same time, it's not expected that July will get the same support from large projects that took place in June.
"Several features of the first half of 2018 stand out, as shown by the construction start statistics," Murray continues. "Nonresidential building so far this year has seen gains for manufacturing buildings, educational facilities and amusement-related facilities, while office building starts have stayed close to last year's pace. However, transportation terminal starts have not proceeded at the same robust volume that occurred in early 2017, and store construction has weakened further. Residential building is seeing surprising resilience from multifamily housing, even as apartment vacancy rates have moved up gradually. The public works sector is showing widespread increases this year, outweighing a slightly slower (yet still strong) pace for new pipeline projects compared to a year ago. The electric utility/gas plant category continues to decline, exerting a downward pull on total construction starts in similarity to what occurred during 2016 and 2017. Although the construction industry is facing increased headwinds during 2018, namely higher material prices and rising interest rates, these have yet to have a discernible negative impact on the broad level of construction starts. On the plus side, the construction industry is benefitting currently from the tailwinds of a strong economy, some easing of bank lending standards, and greater funding for federal public works programs as the result of the omnibus appropriations legislation passed in March."
Nonresidential building construction increased 57 percent in June. In the commercial category, office construction grew 53 percent; store construction advanced 18 percent; warehouse construction rose 14 percent; and hotel construction dropped 15 percent. In the institutional category, health care facility construction jumped 103 percent; educational building construction grew 16 percent; public buildings rose 12 percent; transportation terminal construction fell 16 percent; churches decreased 35 percent; and amusement-related construction declined 37 percent;.
Residential building construction rose 4 percent in June. Single-family housing increased 2 percent, and multifamily construction increased 9 percent.
Nonbuilding construction decreased 28 percent in June.
During the first six months of 2018, nonresidential building was down 3 percent compared with the same time period in 2017. Residential building increased 6 percent, and nonbuilding construction was unchanged. By geographic region, the South Central increased 10 percent; South Atlantic rose 4 percent; Northeast dropped 1 percent; Midwest fell 3 percent; and West declined 4 percent.