New construction starts in October dropped 9% to a seasonally adjusted annual rate of $742.9 billion, pulling back after a 14% jump in September, according to Dodge Data & Analytics. Over the past two months, the pattern for total construction starts was shaped by nonresidential building, which fell 30% in October after soaring 37% in September.
Nonresidential construction. Although nonresidential building in October did include the start of several very large projects, led by the $1.1 billion new ballpark for the Texas Rangers in Arlington TX, Dodge said they were not the same magnitude as the three exceptionally large projects entered as September starts — a $6 billion ethane cracker plant in Pennsylvania; the $4 billion Delta Airlines new terminal facility at LaGuardia Airport in New York NY; and the $1.7 billion 50 Hudson Yards office tower in New York NY.
Residential construction. Residential building in October slipped 1%, due to a slower pace for multifamily housing. Running counter was a sharp 27% increase for nonbuilding construction, which was lifted by the start of the $3 billion expansion of the Atlantic Sunrise natural gas pipeline in Pennsylvania and Virginia. For the first 10 months of 2017, total construction starts on an unadjusted basis were $631.2 billion, up 1% from the same period a year ago. The year-to-date gain for total construction was restrained by a 38% drop for the electric utility/gas plant category. If the electric utility/gas plant category is excluded, total construction starts during the first ten months of 2017 would be up 4% relative to the same period a year ago.
“The construction start statistics have occasionally been subject to ‘spikes’ on a monthly basis, boosted by the presence of several unusually large projects, and September definitely qualified as one of those ‘spikes’,” Robert Murray, chief economist for Dodge Data & Analytics, said in the release. “The pace for nonresidential building in September was unsustainably high, so October’s decline was expected. Nonresidential building is still on track to show moderate growth for 2017 as a whole, helping to keep the expansion for overall construction activity going.
“On the residential side, multi-family housing is retreating from a very strong 2016, but to this point the retreat has been modest. And, the downward pull coming from nonbuilding construction appears to be easing, given the ongoing strength shown by pipeline projects and some recent improvement by highways, bridges and mass transit.”
Nonresidential building. Nonresidential building in October was at a $258.7 billion annual rate, down 30% after the 37% hike reported in September. The manufacturing building category dropped 67% following its six-fold jump in September that featured the start of the $6 billion ethane cracker plant in Pennsylvania. October did include several large manufacturing plants, such as a $675 million polyethylene production plant and a $450 million oil refinery, both located in Texas, but they were not close to matching the size of September’s ethane cracker plant.
Institutional construction. The institutional categories as a group in October fell 36% following a 25% increase in September that featured the start of the $4 billion new Delta terminal at LaGuardia Airport. Transportation terminal work was down 82% in October, and declines were also reported for educational and healthcare facilities.
Educational construction. The educational facilities category dropped 29% in October, despite the start of such projects as a $180 million building renovation at the University of Connecticut in Storrs Mansfield, CT, a $134 million innovation complex in Providence, RI, and a $101 million high school in Little Rock, AR.
Other construction. Healthcare facilities fell 21% in October, as only two projects valued at $100 million or more reached groundbreaking, compared to four such projects during September. On the plus side, the amusement and recreational category soared 121% in October, featuring the start of the $1.1 billion retractable roof ballpark for the Texas Rangers in Arlington, TX and a $240 million expansion to the Lexington Convention Center in Lexington, KY. October gains were also reported for religious buildings, up 20%; and public buildings (courthouses and detention facilities), up 15%.
The commercial categories as a group were able to advance 10% in October, even with a 14% retreat for office buildings from September that included the $ Hudson Yards project in New York.