The value of new construction starts in May increased 15% from April at a seasonally adjusted annual rate, construction data provider Dodge Data & Analytics reported on Thursday. "The increase follows a 12% decline in April, and shows total construction activity reaching the highest level reported over the past eight months. 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...and a $1.1 billion rail transit project in the Boston...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 ... 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 12-month moving total basis, total construction starts for the 12 months ending May 2018 were up 1% from the amount reported for the 12 months ending May 2017."
Housing starts in May increased 5.0% at a seasonally adjusted annual rate from the April rate and 20% from the May 2017 rate, the Census Bureau reported on Tuesday. Single-family starts rose 3.9% for the month and 18% year-over-year (y/y). Multifamily starts (in buildings with five or more units), which are often volatile, jumped 11% and 27%, respectively. Year-to-date (first five months of 2018 compared with January-May 2017) starts, not seasonally adjusted, climbed 11% (9.8% for single-family and 13% for multifamily). Building permits, a fairly reliable indicator of near-term starts, declined 4.6% for the month but rose 8.0% y/y. Single-family permits slid 2.2% for the month but rose 7.7% y/y. Multifamily permits declined 8.5% for the month but rose 9.1% y/y. Permits increased 8.9% year-to-date (single-family, 8.6%; multifamily, 8.8%).
The Architecture Billings Index (ABI) topped the breakeven 50 mark for the eighth month in a row to a seasonally adjusted score of 52.8 in May, from 52.0 in April, the American Institute of Architects reported on Wednesday. The ABI measures the percentage of surveyed architecture firms that reported higher billings than a month earlier, less the percentage reporting lower billings; any score above 50 indicates an increase in billings. Scores (based on three-month moving averages) varied by practice specialty: institutional, 54.3 (highest reading since 2013 and up from 52.1 in April); commercial/industrial, 53.6 (down from 54.4); residential (mainly multifamily), 52.1 (up from 51.6); and mixed practice, 47.9 (down from 50.0).
"Contractors in the U.S. commercial construction industry remain optimistic in Q2 [the second quarter of] 2018 about the current state and forward-looking health of the sector," gypsum products maker USG and the U.S. Chamber of Commerce reported on June 14 in their quarterly Commercial Construction Index. "The drivers used to calculate the [index]—backlog levels, new business outlook and revenue expectations—are either the same or within one point of results reported in Q1 2018 and are consistent with the optimism throughout 2017....Contractors in Q2 2018 worry about the impact of material price fluctuations on their businesses. Steel tops the list of materials concerns, with 86% of respondents expecting to see at least moderate to severe impacts on their business in the next three years from recently imposed tariffs. The percentage of respondents who reported concern about material costs doubled quarter-over-quarter. Almost half expressed concerns about the possibility of new tariffs on other construction materials. Some contractors even suggest that price increases could eventually have a negative impact on the volume of projects available."
The National Association of Home Builders reported on Thursday, "Shortages of framing lumber are now more widespread than at any time since NAHB began tracking the issue in a consistent way in 1994, according to results from the May 2018 survey for the NAHB/Wells Fargo Housing Market Index. Over 30% of single-family builders responding to the survey's special questions in May reported a shortage of framing lumber, outdistancing the other 22 listed building products and materials by a wide margin. In second place were trusses (with a shortage reported by 24% of builders), followed by lightweight steel and [oriented-strand board] (at 20% each) and plywood (at 19%). Last year, the reported shortage percentages for these items were significantly lower—21% for framing lumber, and under 15% for all other products/materials. It is probably not a coincidence that the top five items on the 2018 shortage list are made of softwood lumber or steel, both of which have been targeted by the Administration with new import tariffs over the past year."
"State personal income increased 4.3% at [a seasonally adjusted] annual rate in the first quarter of 2018, after increasing 4.7% in the fourth quarter of 2017," the Bureau of Economic Analysis (BEA) reported on Thursday. Earnings (wages, salaries and self-employment income) "increased in 23 of the 24 industries for which BEA prepares quarterly estimates." Construction ranked fourth in dollar amount and percentage increase (9.6%) in earnings from Q4 2017 to Q1 2018. Construction earnings contributed 0.41 percentage points of the 3.72% growth in U.S. personal income. Construction earnings contributed the most to growth in Nevada (0.74 points) but made negative contributions in West Virginia (-0.15 points) and North Dakota (-0.16 points).