Huge Gain in Construction Starts
Dodge Index moved from 153 Dodge Index to 209
Responding to a particularly weak October, construction starts jumped 37% higher in the latest report according to Dodge Data & Analytics. Also, during the reporting period, numerous massive projects broke ground.
By major sector, nonresidential building starts gained 61% over the month, but were outdone by nonbuilding starts, which moved 82% higher. Residential building starts were flat from October to November.
November's gain pushed the Dodge Index to 209 compared to the 153 posted in October. However, the average of the two months is 181 - not much higher than the 11-month average of 173.
"The presence or absence of large projects continues to add immense volatility to the monthly data," stated Richard Branch, chief economist of Dodge Data and Analytics. "However, the underlying trend for the year remains intact - that construction starts are settling back following nine consistent years of growth."
In nonbuilding construction, starts in the electric utility/gas plant led the way due to the start of a large LNG plant as well as several wind power projects. When removing the large gain in utility projects, nonbuilding starts rose only 9%.
Environmental public works starts came in at 51% higher over the month, while highway and bridge starts rose 18%. But, miscellaneous nonbuilding starts, fell 33% for the month.
The largest nonbuilding construction project to break ground in November was the $4.0 billion first phase of the Golden Pass LNG facility in Sabine Pass Texas. Also starting in November was the $743 million Cheyenne Ridge Wind Farm in Cheyenne Wells Colorado, and the $650 million High Prairie Wind Farm in Greentop Missouri.
Through the first eleven months of 2019, nonbuilding construction was 6% higher than in the same period of 2018. The electric utility/gas plant category was 111% higher than a year earlier. However, when removing that category from the sector, starts were down 9% year-to-date. Environmental public works gained 2% over the year, while miscellaneous nonbuilding dropped 19% and highway and bridge starts were 8% lower on a year-to-date basis.
In the nonresidential building sector, several large projects got underway during the month. Manufacturing starts rose 782% over the month due to the start of a large petrochemical plant, while institutional starts rose 27% and commercial starts moved 23% higher. Only two nonresidential building categories, hotels and healthcare, fell in November.
The largest nonresidential building project to break ground in November was a $7.0 billion ExxonMobil petrochemical ethylene project in Gregory Texas. Also starting in November was the Rancho Los Amigos South Campus $330 million office building in Los Angeles, as well as the $296 million first phase of the Volkswagen Body Shop in Chattanooga Tennessee.
Year-to-date through November, nonresidential building starts were 3% lower than a year earlier. Commercial building starts were up 3% with gains in office buildings, warehouses, and parking structures. But institutional starts were 6% lower with all major categories posting declines. Manufacturing starts were down 15% through eleven months.
Residential building starts for the month were essentially flat as single family starts dropped 8%, offsetting a 20% gain in multifamily starts. The largest multifamily building to break ground was the $500 million Calyer Place Apartment Development in Brooklyn New York. Also starting in November was the $350 million Seattle House Mixed-Use Development in Seattle and the $350 million Avenue Bellevue Mixed-Use Development in Bellevue Washington.
On a year-to-date basis through eleven months, total residential buildings starts were down 4%. Single family starts were 2% lower, while multifamily starts declined 10%.
