April Construction Advances 3 Percent Nationwide
New construction starts in April rose 3% to a seasonally adjusted annual rate of $533.7 billion, according to McGraw Hill Construction, a division of McGraw Hill Financial. The increase maintained the upward movement established in March, which followed sluggish activity at the outset of 2014.
By major sector, April gains were reported for nonresidential building and housing, while nonbuilding construction (public works and electric utilities) retreated. Through the first four months of 2014, total construction starts on an unadjusted basis came in at $153.8 billion, unchanged from the same period a year ago.
April’s data raised the Dodge Index to 113 (2000=100), up from 110 in March and 102 during the first two months of 2014. For the full year 2013, the Dodge Index was reported to be 112, so April’s increase brings activity back up to a level slightly above last year’s average monthly pace.
“With construction starts now climbing for two months in a row, it’s become more apparent that some of the lackluster activity in early 2014 was due to tough winter weather conditions,” said Robert A. Murray, chief economist for McGraw Hill Construction. “On the plus side, nonresidential building is strengthening once again after slipping in recent months. The commercial and manufacturing categories are regaining momentum, while institutional building is making the transition to an up-and-down pattern after its steady decline over the past five years.
“Multifamily housing continues to move at a good clip. On the down side, this year’s total construction volume is being restrained by a more subdued pace for public works, given the comparison to last year’s elevated amount and the uncertain prospects for getting new transportation legislation passed. Another cautionary note is related to single-family housing, which through the first four months of 2014 had yet to move beyond the modest erosion that emerged towards the end of last year,” Murray said.
Nonresidential building in April increased 14% to $202.8 billion (annual rate), registering a double-digit gain for the second straight month. Much of the lift came from the often-volatile manufacturing plant category, which jumped 146% in April. The largest manufacturing plant project reported as an April start was a $3-billion ethylene plant in Texas, and other manufacturing plants that reached groundbreaking in April included a $290-million tire plant in Mississippi and a $200-million automotive plant in Michigan.
The commercial categories as a group increased 11% in April, led by gains for stores and warehouses after generally depressed activity in early 2014. Store construction in April climbed 34%, reflecting the start of a $216-million shopping center in Honolulu, while warehouse construction surged 93% from a very weak March with the help of a $50-million speculative warehouse building in Ft. Worth.
Office construction in April slipped 8%, easing back from recent improvement, although April did include the start of a $196-million office building in Houston, a $120-million office complex in Santa Clara, Calif., and a $119-million office building for the National Science Foundation in Alexandria, Va. Hotel construction in April also eased back from recent gains, retreating 11%.
The institutional categories as a group dropped 11% in April, following a substantial 34% increase in March. Health-care facilities were down 11% after being boosted in March by the start of an $820-million hospital in San Diego. The April pace for health-care facilities was still fairly strong compared to the first two months of 2014, as groundbreaking took place for a $215-million replacement hospital in Ventura, Calif., and a $120-million medical center expansion in Honolulu.
The public buildings category in April experienced a steeper 59% decline, after being lifted in March by the start of a $317-million federal courthouse building in Los Angeles. Other April declines were reported for churches, down 7%; amusement-related work, down 19%; and transportation terminals, down 36%.
The educational building category, which is the largest of the institutional group, managed to grow 5% in April. Major education-related projects that reached groundbreaking in April included a $251-million school of medicine building for the University of Buffalo in Buffalo, N.Y., a $115-million science and engineering complex for Northeastern University in Boston, and a $90-million school of medicine building for the University of North Dakota in Grand Forks, N.D.