Nonresidential Construction Increasing, Reed Construction Data Shows

July 16, 2014
The value of nonresidential construction starts in June jumped 14 percent compared with June 2013, Reed Construction Data reported this week, based on data it collected.

The value of nonresidential construction starts in June jumped 14 percent compared with June 2013, Reed Construction Data reported this week, based on data it collected. Cumulative starts for the first half of 2014 exceeded January to June 2013 starts by 2.4 percent. Nonresidential building starts slipped 3.1 percent year-to-date, with a 14.5 percent drop in commercial starts offsetting gains of 5.9 percent for institutional buildings and 13.5 percent for industrial (manufacturing). Heavy engineering starts rose 13 percent year-to-date.

The Dodge Momentum Index “gained 3.3 percent in June, its third consecutive increase following hesitation in February and March,” McGraw Hill Construction reported. The index is “a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. The Dodge Momentum Index appears to be recovering from the weather-induced softness early in the year. Aided by this recent strengthening, the Momentum Index was a healthy 22.6 percent higher in June than a year earlier. Moreover, the growing volume of projects at the planning stage suggests that nonresidential construction starts should be headed higher over the remainder of the year. This month’s increase in the Momentum Index was the result of a strong 8.3-percent surge in commercial building plans. At the same time, the institutional side of the market retreated in June, with new projects at the planning stage slipping 4.0 percent.”

“Due to growth in shale gas production, there has been—and continues to be—a significant increase in capital investment, by chemical and other manufacturing industries, with the possibility of hundreds of billions in new domestic investments, which will drive new business and job growth,” the American Chemistry Council Economics Department wrote in its Weekly Economic Report. “ACC maintains a list of shale-related chemical projects announcements and updates it weekly. Our current list of chemical industry projects totals 188 projects, representing cumulative capital investments totaling $116.9 billion in the U.S.”