NEW YORK CITY—The latest figures from Dodge Data & Analytics convey a mixed assortment of year-over-year and month-to-month growth rates. On the one hand, the rate of new construction starts in July was essentially the same as it was in June, while on the other hand, the month continued the generally upward trend seen thus far in 2015.
July’s Dodge Index reading was 133, the same as June’s, with both months registering a seasonally adjusted annual rate of $629.4 billion. A closer look behind July’s top-line numbers reveals that nonresidential building rose 2% over June, residential building maintained the strengthening trend seen over the past several months and the pace of nonbuilding construction—e.g., highways, bridges and energy infrastructure—continued to ease off after starts on very large projects early this year skewed the growth rate upward.
Through the first seven months of 2015, total construction starts on an unadjusted basis were $397 billion, up 19% from the same period a year ago. If electric utility and gas plant starts were taken out of the equation, total construction starts during the first seven months of 2015 would be up a more moderate 10% from the same period a year ago.
The year’s first half showed “wide swings in the pattern of total construction starts, affected by the presence or absence of unusually large projects,” says Dodge Data’s chief economist, VP of economic affairs Robert A. Murray. “Amidst these top-line swings, the underlying trend of activity has been generally upward relative to last year.”
While June and July’s measurement of 133 on the Dodge Index was at the low end of the index’s range thus far this year, Dodge Data says the reading is comfortably above the average of 125 seen in 2014. As another measure of the sector’s generally good health, the Associated General Contractors of America said Friday that construction employment rose Y-O-Y in 37 states and the District of Columbia during July, compared to 28 states in June.
Most of nonresidential construction’s momentum thus far in ‘15 came from the institutional segment, including educational facilities, transportation-related buildings and amusement and recreational facilities, although July saw a 1% decline in this area. Conversely, while the commercial categories showed some deceleration during this year’s early months, “positive real estate market fundamentals are expected to encourage renewed growth,” Murray says.
In fact, the commercial categories rose 12% during July, with M-T-M increases in all categories aside from hotels. Warehouse construction posted an especially strong increase, with new starts rising 28% from June. Not surprisingly, Dodge’s data showed residential construction starts up 4% for July, with multifamily up 21% for the month. Murray observes that “even the single-family side of the market is showing some hesitant signs of strengthening.”
