Construction's June Starts Drop From May, First-Half Results Are Up

June construction starts fell 15% from the previous month’s level, to a $620.2-billion annual rate, with part of the downturn due to a huge liquefied natural gas facility in Texas that got under way in May, Dodge Data & Analytics has reported.

On the brighter side, Dodge’s latest monthly report on new construction, released on July 22, also showed that starts for January through June rose 23% year over year.

But Dodge noted that, excluding the impacts of big electric utility and natural gas facilities, overall first-half construction starts climbed 11% compared with year-earlier levels.

Dodge D&A’s month-to-month figures are adjusted for seasonal variations; its year-to-year numbers are not.

The June downturn in new projects also cut the Dodge Index to 131 from May’s 154. The 2000 level equals 100 for the index.

The falloff in energy megaprojects led nonbuilding construction to tumble 38% in June to a $162.5-billion annual rate, Dodge said. But the sector’s first-half total soared 62%, year over year, thanks to the Texas project and other major LNG complexes that started during the period.

Robert Murray, Dodge D&A chief economist, said that the boom in energy projects “will subside as the year proceeds.”

He added, “Public works construction revealed surprising strength during the first half of 2015 but it, too, is expected to subside given essentially flat federal funding.”

Nonresidential building declined 8% in June, to a $190.6-billion annual rate but the sector’s six-month total was up 4% year over year.

Within the nonresidential category, commercial buildings, stores, warehouses and hotels were down in June from their May levels, but office projects’ volume increased.

Residential construction moved up a modest 2% last month from May, to a $267.1-billion rate, with the multifamily segment leading the way. Dodge reported that eight multifamily projects of $100 million or more were launched in June.

For the first half of the year, residential increased 17% from its results for the comparable 2014 period.

(ENR had been owned by Dodge D&A until July 1, when ENR was purchased by BNP Media Inc.)

Tom Ichniowski has been writing about the federal government as ENR’s Washington Bureau Chief since the George H.W. Bush administration, and he has covered at least five major highway bills. A recognized expert on government policy on infrastructure and regulation, Tom is also a Baltimore native and Orioles fan who grew up rooting for Brooks and Frank Robinson. He is a graduate of Columbia College and Columbia’s graduate school of journalism, where he once used “unrelentless” in a headline.

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