Dodge Data & Analytics, New York, has reported construction starts increased 15 percent in May from April. Total construction starts in May were up 1 percent compared with May 2017.
The May statistics raised the Doge Index to 166, compared to April's reading of 144.
"During the first five months of 2018, total construction starts have shown an up-and-down pattern, with May coming in strong after a subdued April," says Robert A. Murray, chief economist for Dodge Data & Analytics. "Much of the volatility in early 2018 has come from the public works sector, affected by the presence of unusually large project starts during a given month such as what took place in May. In addition, the nonresidential building sector showed resilience in May, bouncing back after a lackluster performance in April."
"On balance, the pace of total construction starts is staying close to the levels achieved over the past year, when activity grew 5 percent," Murray continued. "It's true that the construction industry is facing increased headwinds, such as higher material prices and the recent pickup in interest rates, but to this point they have not yet produced a discernible negative impact on the overall level of construction starts. On the plus side, the public works and institutional building sectors continue to benefit from the state and local bond measures passed in recent years. The public works sector should also benefit from the increased federal funding for transportation projects included in the March 2018 federal appropriations bill. While market fundamentals such as rents and vacancies have weakened for multifamily housing, they still remain relatively healthy for warehouses and offices. Bank lending standards for nonresidential building projects have eased slightly, and the recent rollback of Dodd-Frank regulatory constraints on mid-size regional banks may lead to more funding for construction projects in the near term."
Nonresidential building construction rose 18 percent in May after a 12 percent decline in April. In the commercial category, hotel construction jumped 27 percent; office construction grew 7 percent; store construction dropped 33 percent; warehouse construction advanced 21 percent; and manufacturing plant construction fell 54 percent. In the institutional category, health care facility construction slipped 4 percent; churches increased 36 percent; educational building construction grew 29 percent; public buildings fell 24 percent; amusement-related construction increased 138 percent; and transportation terminal construction advanced 132 percent.
Residential building construction did not change from May to April. Single-family housing fell 4 percent, and multifamily construction increased 13 percent.
Nonbuilding construction increased 8 percent in May.
During the first five months of 2018, nonresidential building was down 16 percent compared with the same period in 2017. Residential building increased 5 percent, and nonbuilding construction has unchanged from its 2017 amount. By geographic region, the Midwest dropped 8 percent; South Atlantic rose 4 percent; South Central decreased 1 percent; West dropped 4 percent; and Northeast fell 12 percent.
