Dodge, ConstructConnect, IIR differ on January starts; AIA, ACEC, NAHB outlooks vary

Three firms that privately collect data on construction starts reported varied results for January. "The value of new construction starts in January advanced 2% compared to December" at a seasonally adjusted annual rate, Dodge Data & Analytics reported on Friday. "The slight gain followed...declines of 7% in November and 10% in December...Residential building climbed 4%, lifted by a rebound for multifamily housing. Nonresidential building edged up 1%, reflecting a stronger pace for its commercial building segment including large office projects in Reston, Va., Houston, Boston, Austin, and Seattle. Nonbuilding construction also edged up 1%, helped by the start of a $1.0 billion natural gas pipeline in Oklahoma and several large electric utility projects. On an unadjusted basis, total construction starts in January were...down 12% from the same month a year ago. On a 12-month moving total basis, total construction starts for the 12 months ending January 2019 held steady with the corresponding amount for the 12 months ending January 2018....By major sector, nonresidential building matched the previous period's volume, with commercial building up 2%, institutional building down 5%, and manufacturing building up 17%. Residential building advanced 4% compared to the previous period, with multifamily housing up 7% and single-family housing up 3%. Nonbuilding construction fell 6% from the previous period, with public works down 2% and electric utilities/gas plants down 30%." ConstructConnect reported that the value of starts in January 2019 declined 20.5% from January 2018, "due to shortfalls" in commercial (-40%), heavy engineering (-19%), institutional (-17%) and residential construction starts (-20%). Industrial construction, in contrast, more than doubled, rising 125%. The value of starts in the latest 12 months combined slipped 5.5% from the January 2017-January 2018 period, with nonresidential starts down 2.2% and residential starts down 11%. Industrial Info Resources on Friday reported that its "North American Industrial Project Spending Index, which measures the value of active projects in the pipeline for the year, registered a 2.8% increase in January" compared to the January 2018 total for industrial projects. The firms may not all identify the same projects, amounts, or starting dates and may classify projects differently or exclude certain categories.

           The Architecture Billings Index (ABI) exceeded the breakeven 50 mark for the 24th month in a row in January, based on revised seasonal adjustment factors, with a seasonally adjusted score of 55.3, up from 51.0 in November, the American Institute of Architects (AIA) reported on Thursday. The ABI measures the percentage of surveyed architecture firms that reported higher billings than a month earlier, less the percentage reporting lower billings; scores over 50, on a 0-100 scale, suggest billings increased overall. Scores (based on three-month moving averages) for three practice specialties—institutional, commercial and residential (mainly multifamily)—were clustered near 53; all have remained above 50 since the second half of 2016. This month's survey asked "respondents about the impact of the government shutdown on their firms. While the majority reported no impact, nearly one-quarter of responding firms reported either a direct impact on at least one of their projects (12%) or an indirect impact through contractors and/or clients that were affected by the shutdown (10%). Overall, the most frequently cited impact from the shutdown was a delay in project cashflow (43% [of the directly or indirectly affected firms]), followed by clients being more cautious about pursuing projects in an uncertain business climate (37%), an inability to sign new contracts during the shutdown (23%) and projects delayed due to difficulty obtaining permits (21%)."

           The American Council of Engineering Companies (ACEC) reported on Thursday that in its fourth quarter 2018 Engineering Business Index (EBI) "survey of more than 200 engineering firm leaders, conducted January 3-18, the composite EBI score fell sharply from 66.3 to 58.5—the biggest quarter-to-quarter decline and the lowest overall rating since the survey began in 2014. The EBI measures engineering industry leader confidence about their firms and their markets. Any score above 50 signals positive market sentiment....Firm-leader expectations for the coming year plummeted across all public market sectors except for transportation. The biggest declines from the third-quarter survey were in water and wastewater (71.9 to 62.3) and buildings (63.6 to 52.3)....While industry-leader optimism [regarding the transportation market increased] from last quarter (72.0 from 69.8), many respondents signaled significant concerns about current transportation funding. In the private-client markets, respondents were also less than enthusiastic about the coming year, with the biggest declines in buildings (66.2 to 50.3), energy and power (70.4 to 61.8), and land development/surveying (62.1 to 45.0)."

           "Builder and developer confidence in the multifamily market weakened slightly in the fourth quarter," the National Association of Home Builders (NAHB) reported on Thursday in its latest Multifamily Market Survey. "The Multifamily Production Index (MPI) fell one point from the previous quarter to 47, with a number below 50 indicating that more builders report market conditions are getting worse than improving....The MPI is a composite index consisting of three key components of the multifamily market: the production of low-rent units, market-rate rental units, and for-sale units (condominiums). All three components settled below 50 in the fourth quarter: low-rent units fell 11 points to 48, while the component measuring market rate rental units increased three points to 49 and the component measuring for-sale units rose five points to 44....The weaker MPI reading in the fourth quarter is in line with NAHB's multifamily forecast, which projects a leveling off and slight dip in the production of multifamily units for 2019."

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