Nonresidential Building Steady in DecemberJanuary 25th, 2017 | Category: Industry News
New construction starts in December slipped 5 percent to a seasonally adjusted annual rate of $613.0 billion, according to Dodge Data & Analytics. The latest month’s decline for total construction was due to sharply reduced activity for the nonbuilding construction sector, as nonresidential building in December held steady with its November pace, and residential building was able to register moderate growth.
For all of 2016, total construction starts advanced 1 percent to $676.5 billion, a significantly smaller gain than the 11-percent increase in 2015. If the volatile manufacturing plant and electric utility/gas plant categories are excluded, total construction starts in 2016 would be up 4 percent.
The December statistics produced a reading of 130 for the Dodge Index, down from a revised 136 for November. For the full year 2016, the Dodge Index averaged 143.
“The construction start statistics over the course of 2016 revealed a varied pattern, with the end result being a slight gain for the year as a whole,” says Dodge chief economist Robert A. Murray. “On a quarterly basis, growth was reported during the first and third quarters, while activity settled back during the second and fourth quarters. On the plus side for 2016, commercial building continued to rise, and institutional building provided evidence that it was beginning to regain upward momentum after pausing in 2015. Single family housing showed moderate improvement, while multifamily housing witnessed growth in numerous markets with the notable exception of New York [City], which retreated after the robust activity reported in 2015.”
He adds, “In a broad sense, construction activity shifted to a more mature stage of expansion in 2016, characterized by a slower rate of growth for total construction compared to the 10- to 12-percent gains of the previous four years. For 2017, more growth at a moderate pace is expected for total construction.”
Nonresidential building in December was reported at $224.0 billion (annual rate), basically unchanged from November. The commercial categories as a group advanced 11 percent in December, making a partial rebound after falling 20 percent in the previous month. Hotel construction climbed 74 percent, and office construction in December increased 25 percent.
The institutional building categories as a group dropped 17 percent in December, and healthcare facilities were down 12 percent. On the plus side, the educational facilities category jumped 34 percent in December, reaching its highest amount in 2016.
For 2016 as a whole, nonresidential building advanced 4 percent to $227.7 billion, regaining upward momentum after slipping 2 percent in 2015. The commercial categories as a group in 2016 climbed 11 percent, a faster rate of growth than the 7-percent rise in 2015. Leading the way in 2016 was office construction, increasing 21 percent as it continues to move upward from the extremely low amounts reported during the years immediately following the recession. Hotel construction in 2016 advanced 19 percent, matching its rate of growth in the previous year. Store construction was the one commercial project type not able to register an increase in 2016, sliding 8 percent as its subdued recovery of the previous five years stalled.
The institutional categories as a group increased 4 percent in 2016 following the slight 1-percent gain reported in 2015. Educational facilities, the largest institutional category, rose 3 percent with the upward push coming from K-12 schools, while college/university construction settled back from earlier gains.
Residential building in December climbed 9 percent to $306.9 billion (annual rate). Multifamily housing finished the year on a strong note, rising 26 percent after retreating 12 percent in November. The 2016 amount for residential building was $287.0 billion, up 6 percent and a smaller gain than the 16-percent hike reported for 2015. Much of the deceleration was due to a slower increase for multifamily housing, which grew just 3 percent as opposed to the 22-percent jump in 2015.