Nationwide February construction starts advance two percent: Public works and electric utilities strengthen after a subdued January

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laguardia central terminal
The start of the $3.4 billion LaGuardia Airport Central Terminal project helped boost the Dodge Index

At a seasonally adjusted annual rate of $706.4 billion, new construction starts in February rose two percent from the previous month, according to Dodge Data & Analytics. This was the second straight monthly increase, following a 15 percent hike in January, as construction starts regained the upward track following four consecutive monthly declines to close out 2016.

Much of February’s advance came from a strong performance by the public works sector, led by the start of a $1.4 billion natural gas pipeline in Ohio, West Virginia, and Pennsylvania, plus an improved level of highway and bridge construction. The electric utility/gas plant category also strengthened with the start of two large power plants and a major transmission line project.

At the same time, nonresidential building made a partial retreat after its strong January performance, yet still remained slightly above its average monthly pace during 2016. Residential building in February also settled back, due to a slide for multifamily housing. During the first two months of 2017, total construction starts on an unadjusted basis were $98.5 billion, down four percent from the same period a year ago, which included elevated amounts for the often volatile manufacturing plant and electric utility/gas plant categories. Excluding manufacturing plants and electric utilities/gas plants, total construction starts during this year’s January-February period would be up seven percent compared to last year.

The February statistics produced a reading of 149 for the Dodge Index (2000=100), compared to an upwardly revised 147 for January. The improved volume of construction starts during the first two months of 2017 also compares favorably to the 137 average for the Dodge Index during last year’s fourth quarter, as well as the 146 average for the full year 2016.

“The first two months of 2017 provide evidence that construction starts are still trending upward, even with the loss of momentum that occurred towards the end of 2016,” said Robert A. Murray, chief economist for Dodge Data & Analytics.

“The subdued performance by public works and electric utilities in recent months had restrained the level of total construction starts, so their improved activity in February is a welcome development,” Murray said. “Also welcome during the first two months of 2017 is the strength shown by nonresidential building, and especially its institutional segment. While nonresidential building settled back in February, its January amount had been lifted by the start of the $3.4 billion Central Terminal Building project at LaGuardia Airport in New York NY and several other large airport terminal projects.

“In February, nonresidential building was still two percent higher than last year’s average pace, aided by the start of the $1.2 billion terminal building portion of phase 1 of the $1.8 billion South Terminal C project at Orlando International Airport and the $1 billion Chase Center sports arena and office complex in San Francisco CA that will be the home of the Golden State Warriors basketball team. Earlier, the institutional portion of nonresidential building had joined the construction expansion in 2014, after a five-year decline, but then basically plateaued during 2015 and 2016. The strength shown by institutional building so far in 2017 suggests that it will now make a more substantial contribution towards keeping the upturn for nonresidential building going.”

Nonbuilding construction in February jumped 35 percent to $167.7 billion (annual rate), reporting its highest level of activity in eight months. The public works categories as a group climbed 24 percent, continuing to strengthen after a 37 percent rise in January that followed weak activity in December. The miscellaneous public works category, which includes pipeline work and airport runways, advanced 29 percent in February. Providing much of the lift was the $1.4 billion Leach and Rayne Express Natural Gas Pipeline in Ohio, West Virginia, and Pennsylvania, plus the $200 million Dominion Leidy South natural gas pipeline in Pennsylvania, Maryland, and Virginia.

Also contributing to February’s miscellaneous public works gain was the $283 million airport runway portion of the South Terminal C project at Orlando International Airport and the $267 million earthquake safety program in Oakland CA to upgrade the Transbay Tunnel portion of the BART mass transit system. Highway and bridge construction in February surged 38 percent after four months of decline that saw the level of construction starts fall by 29 percent. Supporting the February increase for highways and bridges were the $457 million Georgia State Road 400 & I-285 Interchange project in the Atlanta GA metropolitan area and the $210 million roadway portion at Orlando’s South Terminal C project. In February, the top five states in terms of the dollar amount of highway and bridge starts were – Georgia, Florida, Arkansas, Pennsylvania, and Michigan.

Also rising in February was sewer construction, increasing 33 percent with the boost coming from the $415 million EchoWater effluent pumping station in Elk Grove CA. Registering declines in February were river/harbor development, down six percent; and water supply construction, down 47 percent. The electric utility/gas plant category in February increased 113 percent after a lackluster January, helped by the start of the following projects – an $869 million natural gas-fired power plant in Louisiana, a $717 million wind power facility in Texas, and a $635 million transmission line project in Minnesota.

Nonresidential building, at $238.5 billion (annual rate), dropped nine percent in February following its 18 percent January gain. The institutional categories as group were down 14 percent, after soaring 42 percent in January due to the push coming from the start of the $3.4 billion Central Terminal Building at LaGuardia Airport plus other airport terminal projects at San Francisco International Airport, Seattle-Tacoma International Airport, and Chicago’s O’Hare International Airport.

Although transportation terminal work in February was down 62 percent, the latest month did include the start of the $1.2 billion terminal building portion of the South Terminal C project at Orlando International Airport and a $163 million terminal modernization project at Atlanta’s Hartsfield-Jackson International Airport. Also retreating in February was the public buildings category (courthouses and de