At a seasonally adjusted annual rate of $729.7 billion, new construction starts in May climbed 3 percent compared to April’s already elevated pace, according to Dodge Data & Analytics. The nonbuilding construction sector provided much of the lift, given an exceptionally strong amount reported for the electric power and gas plant category, which reflected a massive liquefied natural gas (LNG) export terminal project in Texas being entered as a May start.
Residential building showed modest improvement in May, helped by more multifamily housing, while nonresidential building fell sharply from its heightened April volume. Highway and bridge construction slipped 1 percent.
“The presence of unusually large projects, notably several LNG terminals and several petrochemical plants, continues to lift the volume of total construction starts above its underlying trend,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “This lift from unusually large projects is expected to become less pronounced as 2015 proceeds, which still leaves total construction starts growing at about a 10 percent clip. Nonresidential building is witnessing a broader expansion this year, with its institutional building segment contributing to the upturn along with the strengthening trend already established for commercial building. Residential building is seeing further growth for multifamily housing although any upward movement by single-family housing remains hesitant. The public works sector has proven to be surprisingly resilient so far in 2015, as states and localities have picked up some of the slack from essentially flat federal funding. On a cautionary note, public works still faces near term uncertainty, since the recently expired federal transportation legislation was extended by Congress only through the end of July, and the Highway Trust Fund will need to be shored up once again with additional funding.”