The value of new construction starts climbed 9% in January to a seasonally adjusted annual rate of $621.0 billion, according to Dodge Data & Analytics. The increase for total construction was the result of an especially strong performance by the nonbuilding construction sector, which benefitted from the start of a massive liquefied natural gas terminal facility in Texas.
Meanwhile, nonresidential building lost momentum for the second month in a row and residential building pulled back due to a slower pace for multifamily housing. On an unadjusted basis, total construction starts in January were reported at $43.2 billion, up 18% from the same month a year ago.
The January statistics raised the Dodge Index to 131 (2000=100), compared to 120 for December, although still short of the most recent high of 143 reached in November. For the full year 2014, the Dodge Index averaged 122. “During 2014 and now early 2015, the month-to-month pattern for construction starts has often reflected the presence or absence of exceptionally large projects,” said Robert A. Murray, chief economist for Dodge Data & Analytics.
“For much of 2014, a substantial share of this work was petrochemical-related, such as a $3-billion Exxon petrochemical plant expansion in Texas. Toward the end of last year, a pickup in liquefied natural gas-related facilities emerged, led by the start of the $3.6-billion Dominion Cove Point Liquefaction Project in Maryland. January included an estimated $6 billion for the start of two segments of a huge liquefied natural gas export facility in Texas,” Murray said.
“The month-to-month variation for overall construction starts is taking place around what is still a rising trend. For nonresidential building, the continued improvement by its commercial and now its institutional project types should enable this sector to register more growth in 2015, notwithstanding a sluggish January. For residential building, the strengthening job market and some easing of lending standards for home mortgages are expected to help single-family housing see moderate improvement relative to a flat 2014,” he said.
Nonbuilding construction jumped 87% in January to $231.8 billion (annual rate). The electric power and gas plant category soared 840%, led by the inclusion of these projects as January starts: $6 billion for two segments of a liquefied natural gas export facility on Quintana Island near Freeport, Texas; a $1.5-billion liquefied petroleum gas export terminal in Freeport, Texas; and a $1-billion liquefied natural gas receiving terminal in Ingleside, Texas. Other major January entries for the electric power and gas plant category were a $300-million wind farm in Texas and the $170-million segment of a solar power facility in Nevada.
The public works portion of nonbuilding construction grew 7% in January. The miscellaneous public works category (which includes such diverse project types such as pipelines, mass transit and outdoor sports stadiums) advanced 49%, boosted by the $350-million modernization of Sun Life Stadium in the Miami area. Gains were also registered by sewer construction, up 30%; and water supply construction, up 12%; but river/harbor development retreated 33%. Highway and bridge construction held steady with its December pace and featured the start of the $550-million Border Highway West project in El Paso, Texas.
Nonresidential building, at $159.3 billion (annual rate), fell 17% in January. Much of the decline was related to a low volume for the often-volatile manufacturing plant category, which plunged 61% for the month. The largest manufacturing project entered as a January start was a $180-million tile plant in Tennessee, a smaller-scale project than the $500-million-plus projects that were frequently reported during 2014.
The commercial categories as a group retreated a more moderate 13% in January. Although new hotel construction starts were down a steep 31%, both stores and offices registered only modest slippage. Store construction, down 5%, still included the start of a $200-million retail project at the South Street Seaport in New York City.
Office construction, down 3%, still included the start of three projects valued at $100 million or greater—the $190-million office portion of a $215-million, mixed-use building in Charlotte, N.C.; a $122-million corporate headquarters in New Hyde Park, N.Y.; and a $118-million office expansion in Hollywood, Calif.
Warehouse construction, up 4%, was the one commercial project type that reported a January gain, supported by the start of a $70-million distribution center in San Antonio, Texas.
The institutional categories as a group were also down 13% in January. Educational facilities construction, the largest nonresidential building category by dollar volume, dropped 12%, as it receded from the improved activity reported during the latter half of 2014. Even with this decline, there were still several large high school construction projects that began in January, including a $77-million high school in Olathe, Kan., and a $76-million high school in Houston.
Health care facilities construction in January was down a more substantial 31%, despite the start of a $170-million hospital tower expansion in Detroit. Of the smaller institutional categories, similar declines were reported for public buildings, down 18%; and transportation terminals, down 19%.