May Starts Rebound 15%

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May Starts Rebound 15%

New construction starts in May jumped 15% to a seasonally adjusted annual rate of $783.6 billion, according to Dodge Data & Analytics. The lift in May came from substantial gains for nonbuilding construction, up 39%; and nonresidential building, up 18%; as both sectors benefitted from the start of several very large projects. Nonbuilding construction, and specifically its public works segment, was boosted by the start of three large natural gas pipelines with a combined construction start cost of $4.6 billion, plus $1.4 billion related to the start of an environmental cleanup project at the Los Alamos National Laboratory in New Mexico, a $1.4 billion rail transit project in Los Angeles CA, and a $1.1 billion rail transit project in the Boston MA area. Nonresidential building was aided by the start of a $1.0 billion Facebook data center in Nebraska, the $764 million expansion to the Washington State Convention Center in Seattle WA, and a $740 million airport terminal project at Salt Lake City International Airport. Meanwhile, residential building in May held steady with its April pace. Through the first five months of 2018, total construction starts on an unadjusted basis were $299.9 billion, down 3% from the same period a year ago. On a twelve-month moving total basis, total construction starts for the twelve months ending May 2018 were up 1% from the amount reported for the twelve months ending May 2017. The commercial categories as a group rose 7% in May, showing improvement for the second month in a row after April’s 6% gain. Hotel construction had a strong May, climbing 27% as the result of such projects as the $320 million Four Seasons Hotel in New Orleans LA and the $222 million Kalahari Resort in Round Rock TX. Warehouse construction advanced 21% in May, reflecting the start of a $200 million warehouse complex in Edgerton KS and an $83 million tire distribution center in the Memphis TN area. New office construction starts increased 7% in May, lifted by a $1.0 billion expansion to a Facebook data center in Papillion NE and a $300 million office building in Charlotte NC. Also contributing to May’s commercial building upturn was the commercial garage category, which grew 19%. However, store construction retreated from its improved April amount, falling 33% in May. The manufacturing building category in May plunged 54%, showing weaker activity for the second month in a row.