Dodge released the Feb 2017 construction starts today. For the Jan and Feb reports, I think the most relevant piece of information in this report is that Jan and Feb 2016 values were revised up, in total by 15%. That alone has added 2% to total 2016 starts.
In the Dodge October Construction Outlook report, construction starts total for 2016 were predicted at $676 billion, and 2017 at +5%, or $713 billion. Revisions so far have increased 2016 actual to $692 billion. 2016 is on track to go above $700 billion, and at +5%, 2017 could reach $735 billion.
New 2017 starts are being compared to upwardly revised 2016 values. That understates 2017 performance. Dodge Data provides revised starts a month later and 12 months later. In every monthly release, the previous month is revised AND the last year’s year-to-date is revised. Dodge does incorporate other (minor) revisions at a later date, but the “12 month” revision to the previous year-to-date values captures the largest part of all revisions.
This February report includes revisions to the total 2016 YTD, Jan+Feb 2016. The 2017 values won’t get that equivalent “12 month” revision until next year. Therefore, Current year YTD values (not-yet-revised) are being compared to the previous year YTD revised values which has the affect of making current YTD growth appear lower than it should.
In the last 10 years the YTD revisions have always been up. Usually, most of the revisions occur to nonresidential buildings, about 5% to 6% per year, with only a 3% to 4% revision to infrastructure and only 2% to residential.
So far in 2017, year-to-date 2016 values for Jan+Feb have been revise up by 15%. That’s a 2% revision to the 2016 annual total. Already in just the first two months, on an annual basis, nonresidential buildings have been revised up 2%, non-building infrastructure up 4% and residential up 1.3%.
While the 2017 YTD value this month is noted as down 4% compared to last year, keep in mind last year’s value was just revised up by 15%. So, much of the reason 2017 is down is because 2016 values have had revisions applied and 2017 have not. To me, this latest report looks up.