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Construction momentum rolls into 2017

In late October, Dodge Data & Analytics released its 2017 Dodge Construction Outlook.


In a recent Specialty Tools and Fasteners Distributors Association (STAFDA) release, it forecasts total U.S. construction starts in 2017 will advance 5 percent to $713 billion, following gains of 11 percent in 2015 and an estimated 1 percent in 2016.

"Total construction starts during the first half of 2016 lagged behind what was reported in 2015, raising some concern that the current construction expansion may have run its course," says Robert Murray, chief economist for Dodge Data & Analytics.

"But as 2016 proceeded, the year-to-date shortfall grew smaller. The construction industry has now entered a mature phase of its expansion characterized by a slower growth rate from 2012-2015, but still growth."

For 2017, gains of 8 percent are expected in both residential building and nonresidential building while non-building construction is expected to slide another 3 percent.

Construction starts by sector are as follows:

  • Single family housing will rise 12 percent in dollars corresponding to a 9 percent increase in units to 795,000 (Dodge basis). Older millennials are now moving into the 30 to 35 year-old age bracket, which should lift demand for single family housing.

  • Multifamily housing will be flat in dollars and down 2 percent in units to 435,000 (Dodge basis). This project type appears to have peaked in 2015 but the retreat should be gradual.

  • Commercial building will increase 6 percent on top of the 12 percent gain estimated for 2016. Office construction is showing improvement with the start of several signature office towers and development efforts in downtown markets. Store construction will uptick from a subdued 2016 and warehouses will register further growth. Hotel construction, while still healthy, will retreat after a strong 2016.

  • Institutional building will advance 10 percent, resuming its expansion after pausing in 2015 and 2016. More growth is expected for the amusement category (convention centers, sports arenas, casinos) and transportation terminals.

  • Manufacturing plant construction will increase 6 percent after steep declines in 2015 and 2016 that reflected the pullback for large petrochemical plant starts.

  • Public works construction will improve 6 percent, regaining upward momentum after slipping 3 percent in 2016. Highways and bridges will derive support from the new federal transportation bill. Natural gas and oil pipeline projects are expected to stay close to 2016's volume.

  • Electric utilities and gas plants will fall another 29 percent after the 26 percent decline in 2016. Power plant construction, which was supported in 2016 by the extension of investment tax credits, will ease back as new generating capacity comes on line. 

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