Issue link: https://read.dmtmag.com/i/705621
68 • august 2016 • world fence news NEW YORK – At a seasonally adjusted annual rate of $636.7 billion, new construction starts in May in- creased 5% from April, according to Dodge Data & Analytics. Much of the growth came from the nonbuilding construction sector (public works and electric utilities), which was lifted by a $3.8 billion oil pipeline in the upper Midwest as well as by seven power plant projects with a combined cost of $4.3 billion. Residential building edged up slightly in May, as multifamily hous- ing bounced back from its subdued April performance. However, non- residential building in May retreated, sliding for the second month in a row after the elevated activity reported in March. During the first five months of 2016, total construction starts on an unadjusted basis were $256.7 billion, down 12% from the same period a year ago. Last year's January-May period featured 12 exceptionally large proj- ects valued each at $1 billion or more, including a $9 billion liquefied natural gas export terminal in Texas, an $8.5 billion petrochemical plant in Louisi- ana, the $2.5 billion 30 Hudson Yards office tower in New York, N.Y., and the $2.3 billion Interstate 4 Ultimate Project in Orlando, Fla. In contrast, the January-May pe- riod of 2016 included only four proj- ects valued at $1 billion or more. If these exceptionally large projects are excluded from the comparison, total construction starts during the first five months of 2016 would be down 0.3%, or essentially even, with last year. The May statistics raised the Dodge Index to 135 (2000 =100), up from 129 in April. The Dodge Index had shown moderate improvement during February and March, averag- ing 141, before slipping back in April. "The construction start statistics have shown annual increases since 2010, including a 10% gain in 2015, although the month-to-month pattern has been frequently uneven," said Robert A. Murray, chief economist for Dodge Data & Analytics. "This up-and-down behavior con- tinues to be present in 2016, with May seeing a partial rebound after the set- back in April," he said. "In addition, the year-to-date comparisons in early 2016 relative to last year have been complicated by the fact that the first half of 2015 witnessed elevated levels arising from a number of exceptionally large proj- ects, defined as projects valued at $1 billion or more. "There were considerably fewer such projects during the second half of 2015, and this lower base should enable the year-to-date compari- sons to improve as 2016 proceeds," Murray noted. "The environment for construction still carries a number of positives – long term interest rates re- main low, commercial development is being financed from multiple sources, construction bond measures are being passed at the state level, and the new multiyear federal transportation bill is in place. On the cautionary side, bank lending standards for commercial real estate loans began to tighten during the second half of 2015, and this trend has continued into 2016." Nonbuilding construction in May jumped 24% to $193 billion (annual rate). The public works categories as a group increased 15%, helped espe- cially by a 47% hike for miscellaneous public works, which includes such di- verse project types as pipelines, rail and airport runway projects, and site work. May's data included the start of the Dakota Access Pipeline, with an estimated construction start cost of $3.8 billion, located in the states of North Dakota, South Dakota, Iowa, and Illinois. This oil pipeline will connect the Bakken and Three Forks The Dodge Report Strong gains reported in May for public works, power plants, and multifamily housing continued on page 72