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2018 Construction Outlook Links

Articles Detailing 2018 Construction Outlook

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These links point to articles here on this blog that summarize end-of-year data for 2017 and present projections for 2018.

Spend current vs constant 1993 to 2017 2-6-18

Most Recently Published

Residential Construction Jobs Shortages 2-3-18

2018 Construction Spending – Briefs 1-26-18

Cautions When Using PPI Inputs to Construction! 1-15-18

Indicators To Watch For 2018 Construction Spending? 1-10-18

Spending Summary 2018 Construction Forecast Fall 2017 12-3-17

Backlog 2018 Construction Forecast Fall 2017 11-10-17

Starts Trends 2018 Construction Forecast Fall 2017 11-8-17

In What Category is That Construction Cost? 11-15-17

Construction Jobs / Workload Balance 11-7-17

Constant Dollar Construction Growth 11-2-17

Is Infrastructure Construction Spending Near All-Time Lows? 10-10-17

Summary

2018 Construction Spending – Briefs 1-26-18

Spending Summary 2018 Construction Forecast Fall 2017 12-3-17

2017 Results

Spending Summary 2018 Construction Forecast Fall 2017 12-3-17

New Starts and 2017 Starting Backlog

2018 Construction Spending – Briefs 1-24-18

Backlog 2018 Construction Forecast Fall 2017 11-10-17

Starts Trends 2018 Construction Forecast Fall 2017 11-8-17

Construction Starts and Spending Patterns 9-26-17

 

2018 Spending Forecast

So, About Those Posts “construction spending declines…” 10-4-17

Construction Spending Almost Always Revised UP  5-1-17

Nonresidential Buildings

2018 Construction Spending – Briefs 1-24-18

Nonres Bldgs Construction Spending Midyear 2017 Forecast 7-24-17

Residential

Residential Construction Jobs Shortages 2-3-18

Infrastructure Outlook

2018 Construction Spending – Briefs 1-24-18

Is Infrastructure Construction Spending Near All-Time Lows? 10-10-17

Infrastructure – Ramping Up to Add $1 trillion 1-30-17

Calls for Infrastructure Problematic 1-12-17

Public Construction

Spending Summary 2018 Construction Forecast Fall 2017 12-3-17

Infrastructure & Public Construction Spending 3-5-17

Jobs

Residential Construction Jobs Shortages 2-3-18

Construction Jobs / Workload Balance 11-2-17

Construction Jobs Growing Faster Than Volume 5-5-17

Inflation

Constant Dollar Construction Growth 11-2-17

Construction Inflation Index Tables UPDATED 2-12-18

Construction Cost Inflation – Commentary  updated 2-13-18

US Historical Construction Cost Indices 1800s to 1957

 

 

2018 Construction Spending – Briefs

1-26-18

Dodge Data posted December construction starts on 1-25-18, showing total starts increased 3% from 2016. However, this compares un-adjusted 2017 starts to upwardly revised 2016 starts. Starts are always revised upward in the following year. I expect revisions will show 2017 starts increased by more than 6% over 2016. Total backlog starting 2018 is up 11%. Backlog has increased on average 10%/year the last three years. 2018 spending is projected to increase 8%.

Up Arrows

Nonbuilding Infrastructure starts in 2017 are down 2%. However, we can expect post-year revisions to infrastructure starts. I expect, when all revisions are posted,  that 2017 will show infrastructure starts increased a few percent from 2016. Starts peaked in 2015 and are still near that high-point. Spending reached an all-time high in 2015 and stayed within 0.3% of that high for 2016. Although 2017 shows a spending drop of 3.6%, spending is also prone to large upward revisions, particularly in Power, the largest market in Infrastructure. Starting backlog is up 25% in the last two years. Spending for 2018 is projected to increase 9% to an all-time high.

Transportation terminals 2017 new starts jumped 120%. Rail project starts increased more than 100%. Starting backlog for all transportation work, including terminals, runways, rail and dock work is up 100% in the last two years. 2018 spending is projected to increase 25% over 2017. Also, 2019 spending is projected up over 15%.

Power plant new starts are down for the 2nd year but had hit an all-time high in 2015, up nearly 150% from 2014. Pipeline starts were up more than 125% in 2016 and again in 2017. Starting backlog for all power projects has nearly doubled in the last three years. Spending is projected to increase 10% in 2018 and 5% in 2019.

Highway spending is not projected to change by much, up only 3% in 2018, but it has been within a few percent of the all-time high for the last three years. Backlog from new starts has increased on average 6%/year for the last four years.

Backlog for Nonbldg Infra 2014-2019 1-29-18

 

Nonresidential Buildings new starts in 2017 are up 7%. When all revisions are in, I expect that to climb over to 10%. Starts are up 60% in four years. Starting backlog is up 20% in the last two years. Spending for 2018 is projected to increase 9%.

Office new starts hit an all-time high in 2016 and just missed surpassing that mark in 2017. Starts increased on average 22%/year from 2013 through 2016, but 2017 starts dropped 2%. Starting backlog increased dramatically during that 2013-2016 growth period and backlog is up 50% in the last two years. Spending followed with three years of growth over 20%/year from 2014 through 2016. The 3% spending growth currently recorded for 2017 is an unexplained anomaly. All other data indicates 2017 spending should have followed the pattern set in 2014-2016. 2018 spending is predicted to climb 10% and 2019 could increase 12%.

Educational new starts hit an eight year high in 2016 and increased another 6% in 2017. Starting backlog has increased 10%/year for the last three years. The last three years we’ve seen spending increases of 6%, 5% and 3%. For 2018, spending is projected to increase 14%.

Healthcare starts jumped 13% in 2016, the first significant increase in nearly 10 years. 2017 starts maintained even level with 2016. Coming into 2018, starting backlog is up 16% over the past two years, a sign for slow moderate growth. 2017 is the first time in 5 years Healthcare spending increased, up 4.3%. For 2018, spending is projected to increase 4.8%.

Manufacturing posted several very large project starts in 2017, increasing total starts 20% over 2016. This increased starting backlog 8% for 2018. Although still well below the banner years of 2015 and 2016, spending is projected to increase 8% in 2018.

Amusement/Recreation new starts increased only 5% in 2017, but that follows a 30% increase in 2016 to reach a new high in 2017. Starting backlog has doubled from 2014 to 2018. Spending increased only 5% in 2017 but spending is up 40% in the last 3 years, also reaching a new high in 2017. Spending for 2018 is projected to increase 11%. This spending category includes sports stadiums which by some accounts may fall 40% in 2018.

Lodging experienced six consecutive years of massive growth in starts and spending after losing 75% of its pre-recession market. Starts grew 30%/year from 2011 through 2016. In 2017 starts posted a decline of 5%. Spending averaged 25% growth from 2012 through 2016, but posted only 7% growth in 2017. Backlog is still up slightly to start 2018. Spending is projected to come in at 6% growth for 2018. But backlog drops off 15% for 2019 and spending is expected to follow suit.

Commercial construction is being supported by new starts for warehouse construction which have increased seven consecutive years. In 2010 warehouse construction was only 20% of this market. From 2010, stores grew 50% to a peak in 2015, but warehouses grew 500% to peak in 2017 and are now 50% of the total market. Warehouses are increasing and stores are declining. In 2018, warehouses will make up 60% of the market. Total commercial starts for 2018 will remain equal to 2017 and 2016. The years of big backlog growth occurred from 2012 to 2017. Backlog remains constant from 2017 to 2018 and declines slightly in 2019. After 6 years of spending growth averaging more than 12%/year, spending will increase only 3% in 2018 and 2019 may reach only 2%.

Backlog for Nonres Bldgs 2014-2019 1-29-18

 

Residential spending is more dependent on new starts within the year than on backlog from previous starts. Residential starts are projected to increase 7% over 2017, almost all of that coming from new single family starts. However, residential spending in 2018 is projected to increase only 7% after five years of increases over 10%.

See also

In What Category is That Construction Cost? explains where some specific costs are carried, which may vary between sources. Take particular note of Transportation, Office and Commercial.

Starts Trends Construction Forecast Fall 2017 for a much more thorough handling of the starts forecast.

Indicators To Watch For 2018 Construction Spending?

Spending Summary Construction Forecast Fall 2017

Indicators To Watch For 2018 Construction Spending?

I’ve read several articles recently describing, Why 2018 could be a boom year for construction spending. Several reasons being given to support a potential boom, when we look a little deeper, actually may not be good indicators at all to predict the trend for a strong year in 2018. In my Fall Forecast  I do predict 8% growth in 2018 construction spending, but let’s take a look at what gets us there.

Data that doesn’t tell us much about the future trend in construction spending.

Jobs increased in 2017 up 35% over 2016. In 2017 construction added 210,000 jobs, growth of 35% over 2016, but in 2016 jobs growth decreased by 55% from 2015. 2016 growth was the lowest in 5yrs. In 2013 jobs growth increased by 85% and in 2014 by 71%, but in 2015 and 2016 jobs growth slowed. Yet 2015 was one of the best construction spending years on record. And in 2017, jobs growth increased over 2016 but spending growth slowed. The direction of jobs growth is not an indicator of the future trend in spending.

Nov 2017 spending was higher than expected, and YTD is up 4.2%. This is a slippery slope. Actually we won’t know any particular monthly spending until several months after the initial release. All monthly spending values are subject to revision three times after initial release.  However, residential spending is higher than expected for the YTD and nonresidential buildings spending is below expectations for YTD. But more importantly, construction spending normally fluctuates. For instance, in the 2nd half of 2015, spending was down 4 out of 6 months, lower than forecast three times, posting a total decline of 2.5%. Yet 2015 finished the year up 10%. Then, in the 1st half of 2016, spending was up 5 out of 6 months, far exceeding forecast 3 times, posting a total increase of 6% in 6 months. 2016 finished up 6.5% for the year. Neither half performance predicted final results within the year or the forecast for the future. Furthermore, after inflation, 2017 spending is currently flat with 2016$, so all we are seeing in the 4.5% spending growth in 2017 is inflation. Current and past spending is not an indicator of the future trend in spending.

What data does give an indication of the future trend in construction spending?

Construction Starts (Dodge Data & Analytics DDA), Backlog, Cash flow from Starts, the Architectural Billings Index (ABI), The Dodge Momentum Index (DMI) and New Residential Permits and # of Units Construction Starts all give an indication of the future trend in spending.

Residential Permits and # of new units started gives a fairly immediate indication of residential activity. The ABI gives an indication of nonresidential building to start construction about 9 months out and the DMI about 12 months out. The ABI and DMI give some indication as to whether future starts will increase or decrease. DDA Starts give an indication of the percent growth in future work, but not when the spending will occur, so cannot be used directly to predict spending. A good example is the new start for airport terminal work recorded as a new start in 2017 at $4 billion. But it may take 5 or 6 years to complete that $4 billion project and only cash flow will show the impact on spending.

Care must be taken to use Starts data properly. It is regularly misinterpreted in common industry forecasting articles. Starts dollar values represent a survey of about 50% to 60% of industry activity, therefore Starts dollar values cannot ever be used directly to indicate spending. Also, Starts do not directly indicate changes in spending per month or per year. Only by including an expected duration for all Starts and producing a forecast Cash Flow from Starts data can the expected pattern of spending be developed. Finally, it is the rate of change in Starts Cash Flows that gives an indication of the rate of change in spending.

Cash flow is the best indicator of how much and when spending will occur. Cash flow from DDA starts gives a prediction over time of how spending from each month of previous starts will occur from all projects in backlog. Cash flow totals of all jobs can vary considerably from month to month, are not only driven by new jobs starting but also old jobs ending, and are heavily dependent on the type, size and duration of jobs.

Index of Actual Spending and Starts Cash Flows 2015-2018 2-10-18

Of course, data highlighting demand, occupancy rates, labor and material trends and other economic factors affecting construction trends all weigh into determining future spending expectations. However, for nonresidential buildings and infrastructure approximately 75% to 80% of all spending within the year comes from starting backlog. Most economic factors that will have an affect on spending within the year are already captured in projects that have started and are in current backlog. On the other hand, new residential starts are more important. 70% of all residential spending in the year comes from new starts.

The following trend predictions are developed based on using this outline.

Starts Trends Construction Forecast Fall 2017

Backlog Construction Forecast Fall 2017

Spending Summary Construction Forecast Fall 2017

In What Category is That Construction Cost?

Seldom do two sources present information the same way!

In the construction industry, a disconnect exists in the reporting of construction starts data and spending data.  Problems may arise when data is used to perform comparisons or forecasts. New starts and backlog may be listed in one category and spending for the same markets may be listed in another.

The U.S. Census Construction Put-in-Place (Construction Spending) Release follows these definitions. Almost universally, reporting of construction economic actual spending data follows the U S Census Put-in-Place format. I adjust all other construction starts input/forecasting data that I use to conform to these Put-in-Place definitions. Some pitfalls to be aware of:

Residential spending data is about 35% renovations and improvements that has no units associated with the dollars, so cannot be included in a comparison to housing starts.

Demolition is not included in renovations/improvements. Partial repair of flood damaged homes is NOT included in residential improvements. Full replacement of flood damaged homes is included as improvements, not new single family. Here is Census definition of flood repairs

Offices includes pubic buildings such as city halls and courthouses. Includes data centers and bank buildings. Excludes medical office buildings, offices at manufacturing sites and offices at educational or healthcare facilities. Excludes Public Safety.

Commercial includes all retail buildings, warehouses, parking lots and garages. Excludes parking at educational/healthcare facilities.

Census DOES separate the costs for buildings that are mixed use retail/office/residential.

Educational, along with K-12, includes administrative offices, health centers, parking, residence halls, classrooms, educational research labs, food service and sports/recreation facilities at schools or colleges and universities and all associated infrastructure and maintenance facilities at the educational site. Also includes public libraries, science centers and museums.

Healthcare includes similar support and infrastructure to educational. Also includes medical office buildings, non-manufacturing and non-educational research labs.

Amusement and Recreation includes performing arts centers, civic centers, convention centers, sports and recreation facilities not located at schools or colleges.

Transportation includes air freight and passenger air terminals, runways, bus and railroad passenger terminals, light rail and subway facilities, railroad track, railway structures and bridges, docks and marine terminals and maintenance facilities and infrastructure associated with each.

Some sources of design or new construction starts data carry terminal buildings as commercial buildings, institutional buildings or other public nonresidential buildings. Census caries the building cost of all terminals grouped in with the non-building infrastructure costs of Transportation. Some sources carry public buildings such as city halls and courthouses as Public Safety but Census carries cost data for public buildings such as city halls and courthouses in Offices. Some sources classify laboratories as commercial and warehouses as industrial/manufacturing but Census includes warehouses in Commercial and labs, depending on use, can be either Educational, Healthcare or Manufacturing.

Similar discrepancies may exist when comparing starts or spending to indexes, such as the Architectural Billings Index, which broadly classifies projects as commercial, institutional or residential. Some resources classify Amusement/Recreation as institutional and some as commercial. Labs are sometimes classified as commercial but in many cases are included in educational or healthcare, both institutional.

As you can see, there are several instances where the data are often mixed up. From the point of view of the forecaster, initial input data cannot always be used directly to forecast or match spending output. Some manipulation of the data is required to make input and output match.

For example: I move the starts for terminals from nonresidential buildings to non-building infrastructure Transportation, so that really changes my totals by sector from theirs for nonres bldgs to nonbldg infra. FWIW, my output conforms with most all others, most of whom also follow the Census PIP definitions.

What does your source for data take into consideration? Know your data!

 

 

Backlog Construction Forecast Fall 2017

11-9-17

Total Construction Starting Backlog is at a record high, up 30% from the previous high in 2008.

Infrastructure and Residential sectors dropped to a decade low backlog in 2010. In 2013, nonresidential buildings hit the lowest starting backlog since 2004. Combined, total backlog hit a low-point in 2011, the lowest since 2003. Total Starting Backlog has been increasing since 2011, up 65% in 2018.

Nonresidential Buildings and Non-building Infrastructure backlog are both at all-time highs. 75% to 80% of all nonresidential spending within the year comes from starting backlog. Residential backlog is at a post-recession high, although as will be explained later, it is new residential starts that are more important and starts have tripled since the 2009 low. 70% of all residential spending in the year comes from new starts. Residential starts are still 20% below the 2004 peak.

Starts Generate Backlog

New Starts increased at an average rate of 11%/year from 2012 to 2016. 2017 starts slowed to less than half that pace.

Nonresidential Buildings starts, even though there was a 1% decline in 2015, averaged 13%/year growth for the last 4 years. 2017 will post an 8% increase. The 6 months from Aug 2016 to Jan 2017 was the highest starts since Jan-Jun 2008, also the year nonresidential buildings spending peaked. The 6 months Apr-Sep 2017 just surpassed both those previous peak highs.

Non-building Infrastructure starts were the highest in the 1st 6 months of 2015 than any 6-month period in history. Total 2015 starts increased 26%. 2016 is down just 2% from the peak 2015 starts and 2016 is the 2nd highest starts on record. Those early 2015 starts will still generate 10% of all spending in 2018. 2017 starts are level with 2016. After revisions, 2017 starts may set a new peak high.

Residential starts in 2016 posted the best year since 2005-2006. New starts in 2016 were revised up to show an increase of 10% over 2015. That follows five years of growth averaging 20%/year. New starts in Q1’17 reached an 11 year high.

Entering Backlog

New Backlog is added every month from New Construction Starts. When projects first enter backlog, the amount counted to backlog is the total value of project revenues under contract that are about to start construction, or the same as the new start values. For purposes of predicting future construction spending, as each month of project construction passes, work that has been put-in-place is subtracted from the total value to get the amount remaining in backlog.

Starting Backlog

Starting Backlog is the Estimate-to-Complete (ETC) value of all projects under contract at the beginning of a period. Projects in starting backlog could have started last month or last year or three years ago. The amount counted in backlog is the value of the project that remains or that has not yet been put-in-place. Backlog is the total amount of future spending that will be generated by the project, commonly referred to as the ETC. The sum of all ETCs represents current backlog.

  • Nonresidential buildings 2018 starting backlog is up 10%
  • Non-building Infrastructure 2018 starting backlog is up 12%
  • Residential buildings 2018 starting backlog is down 3%
  • Starting Backlog is at an all-time high for nonresidential buildings and non-building infrastructure.

Typically, starting backlog is a reference to the amount of work in backlog on January 1st. It is referred to as the Starting Backlog for the coming year. The sum of all ETCs as of December 31st represents Starting Backlog.

For any project that has a remaining duration going out past year end, backlog at the start of year does not represent the amount that will be spent within the year. Some of that project backlog will be spent in future years. For this reason, backlog is not representative of spending within the year and the change in Starting Backlog from year to year is not an indication of a change in spending from year to year.

Values and duration of projects that make up backlog help to better predict spending activity over time, particularly in the coming year.

A cash flow schedule of all ETC backlog and predicted new starts provides a tool to predict future spending. It is not enough to look at just the change in backlog to get an indication of the strength of the market. While continued growth in backlog is important, the predicted cash flow from backlog and cash flow from new starts is necessary for predicting spending.

Construction spending is strongly influenced by long duration projects in backlog, more-so than normal monthly starts growth rate. The pattern of continuing or ending cash flows from the long duration backlog projects causes fluctuations in spending that supersede the balance cycle of one month of old jobs ending for every new month of jobs starting. This often can be responsible for some of the monthly fluctuations of construction spending.

The following table shows predicted cash flow from backlog on record as of October 1, 2017 and predicted starts that will generate future backlog in 2018.

Backlog Cashflow 2018 and 2017 11-10-17

Look Ahead to 2018

Buildings and Infrastructure will both hit new all-time highs for starting backlog in 2018.  For four years, from 2010 to 2013, all nonresidential backlog remained nearly constant. Since then, growth has been similar to the pre-recession construction boom of the early 2000s.

Nonresidential buildings 2018 starting backlog is 50% higher than at the start of 2014, the beginning of the current growth cycle. Starting backlog has increased for 5 years at an average 10%/year. Spending from starting backlog, up 10% in 2018, increased for 5 years at an average 9%/year. Buildings will reach a new high for spending in 2018.

Non-building Infrastructure 2018 starting backlog is up 35% since 2014 but spending from backlog is up only 10%. Infrastructure starting backlog has been increasing for more than 10 years, sometimes only a fraction of a percent per year. Since 2010, backlog increased only 3%/year for the first 5 years then it jumped 35% in the last 3 years. Spending within the year from starting backlog is up 8% in 2018. Infrastructure spending will hit a new high in 2018.

Backlog incld Res Starts 2005-2018 11-8-17

Due to the shorter duration of projects, nearly 70% of residential spending within the year is generated from new starts. Unlike nonresidential, backlog does not contribute nearly as much residential spending within the year. New residential starts in Q1’17 reached an 11 year high.

  • Cash flow models of construction projects in backlog are indicating substantial acceleration in nonresidential spending over next year, perhaps most notable in infrastructure.
  • 75% to 80% of nonresidential spending within the year comes from Starting Backlog.
  • 70% of residential spending within the years comes from New Starts. Residential starts are at a post-recession high.
  • Share of spending within the current year from backlog is at an all-time high for nonresidential buildings and non-building infrastructure.

Nonresidential Buildings

Nonresidential buildings experienced a decline in starting backlog as recently as 2013. Since 2013, nonresidential buildings starting backlog is up 60%. Backlog will hit a new all-time high for 2018, 5% over the previous high in 2009 . Not only is starting backlog higher coming into 2018, but also spending from backlog is predicted up by 10%. This will produce a new high in current dollar spending.

Revenues from starting backlog account for 75% of all nonresidential buildings construction spending within the year.

Backlog for Nonres Bldgs 2014-2019 11-12-17

Educational starts, backlog and spending has been increasing for 5 years or longer. 2018 starting backlog is up 16% from 2017. Starts for 2018 are predicted to go up 13% and this will push 2019 starting backlog even higher. This should produce good spending growth for the next few years.

Office construction starting backlog for 2017 was the highest in at least 8 years, more than double at the start of 2014 when the current growth cycle of office construction spending began. For 2018 it’s up 27% over 2017. Office starting backlog increased an average of 28%/year for the last 5 years. Actual spending increased an average of 17%/year. Backlog growth looks like it will support very strong spending increases into 2019.

Commercial Retail backlog will hold steady from 2017 into 2018. This should level off spending after 7 years of strong growth. 2018 backlog still produces a spending increase but current projections show a slight drop in 2019.

Lodging backlog increases slightly for 2018. Beyond 2018, spending will decline, but this is after 6 years of growth totaling 300%.

Manufacturing posted a 100% increase in new starts in 2014 that drove starting backlog to new highs for the next two years. With new starts slowing back to normal by 2016, starting backlog dropped 20% in 2017 and spending dropped 12%. That was expected. What was unexpected is that 2017 posted another very strong year of new starts and that pushed 2018 starting backlog again to a new high. This will support a spending rebound in 2018-2019 after a drop of 18% in the last two years.

Non-building Infrastructure

Non-building infrastructure backlog stood at $180 billion in 2008, the last pre-recession year. At the beginning of 2017, non- building infrastructure backlog hit an all-time high, $260 billion, up 45% from 2008. For the last three years, starting backlog is up 40%. In 2018, it’s up 13%, another new high.

Revenues from starting backlog account for 80% of all non-building infrastructure construction spending within the year.

Backlog for Nonbldg Infra 2014-2019 11-12-17

Power backlog has doubled since 2014. It’s up 11% for 2018. Starts are down 14% from the 2015 peak, but spending from backlog is increasing. Most relevant is that backlog increased much stronger than spending. Backlog is being driven higher by very long duration projects that started in 2015, 2016 and 2017.

Highway starts declined the last two years from the peak in 2015, but starting backlog increased the last 3 years and is now 25% higher than 2015.  The last three years of highway starts are still feeding spending in 2018. There is very little change in the amount of spending from backlog, so 2018 spending won’t change very much from 2017.

Transportation new starts shot up by 70% in 2017, pushing 2018 starting backlog to a new high, up 75% from 2017. That will help increase 2018 spending by more than 15%, but a larger spending increase could come in 2019.

Environmental Public Works, Sewer/water/Conservation is experiencing declining starts, declining backlog and declining spending from backlog. All are at the lowest since 2014. We may not see any increase in construction spending until 2019.

Public Work

Public vs Private starts are not tracked separately, but the public share of markets is known. Therefore a projection of public backlog is possible. Highway and Environmental Public Works are 100% public.  Educational is 80% public, Transportation is 70%, Amusement/Rec is 50%, Healthcare is 20% and Power is 10% public, along with few other smaller shares. Starting backlog for 2018 is up 40% from 2014 due to the predominantly long duration projects that make up public work. This is a post-recession high and is nearing the all-time high of 2008. Increased backlog is indicating the best construction spending increases since 2008 for the next two years.

Residential Buildings

Residential new starts hit bottom in 2009 and starting backlog hit bottom in 2010. Residential on average has the shortest duration and new starts has a dramatic impact on the amount of available work. Both new starts and backlog are now 3x higher than the lows. New residential starts have increased every year since the 2009 bottom, but are still 25% lower than 2004-2005. Residential spending reached its peak of $630 billion in 2005. Current spending is still 15% below that peak. In constant $, spending is 30% below that peak.

Due to the shorter duration of projects, nearly 70% of residential spending within the year is generated from new starts. Unlike longer duration nonresidential projects, backlog does not contribute nearly as much. If no new work started within the year, within a matter of a few months there would be no backlog ETC left to support the residential construction industry.

New starts slowed in 2017 to only 4% growth and similar growth of 6% is expected for 2018. This is not unexpected after 5 years (2012-2016) of new starts growth at an average 20%/year. This leads to a prediction of 2018 spending up only 6%.

All construction starts data in this report references Dodge Data & Analytics starts data.

See this companion post for  Starts Trends Construction Forecast Fall 2017

Also see 2018 spending forecast Spending Summary Construction Forecast Fall 2017

Starts Trends Construction Forecast Fall 2017

11-8-17

It all starts here! Construction Starts Generate Construction Spending.

2017 construction starts through September total $557 billion Year-to-date (YTD), even with 2016. If/when 2017 gets revised as expected it will then show +3% to +4% growth over 2016, but we won’t see that growth in the revision data until next year.

  • Previous year starts always later get revised upwards. Therefore, current year starts ytd growth is always understated.
  • Revisions for the period 2012-2015 averaged +4%.
  • Revisions to 2016 year-to-date through September are +10%.
  • Starts have been increasing at an average rate of 11%/year for the last 5 years.
  • Nonresidential Buildings and Nonbuilding Infrastructure are at or near all-time highs.
  • Residential starts are at a post-recession high.
  • New starts will generate record high 2018 starting backlog for every sector.

Nonresidential Buildings starts, averaged 13%/year growth for the last 4 years, even though there was a 1% decline in 2015. 2017 will post an 8% increase. The 6 months from Aug 2016 to Jan 2017 was the highest period of starts since Jan-Jun 2008, the year nonresidential buildings spending peaked. The 6 months Apr-Sep 2017 just surpassed both those previous peak highs. This will help support increases in nonresidential buildings spending for the next two years.

Infrastructure starts posted a higher value of new construction projects in the 1st 6 months of 2015 than any 6-month period in history. 2016 is down just 2% from the peak 2015 starts and 2016 is the 2nd highest starts on record. Those early 2015 starts will still generate 10% of all spending in 2018. After revisions, 2017 starts may set a new peak high. This would set up infrastructure as the strongest growth sector for the next two years.

Residential starts in 2016 posted the best year since 2005-2006. New starts in 2016 were revised up by 5% to show an increase of 10% growth over 2015. That follows five years of growth averaging 20%/year. Initial values posted for 2017 show starts up by only 3.5%, however, the average revision for the past few years has been +2% to +4%, so 2017 will get revised higher. New starts in Q1 2017 reached an 11 year high.

All construction starts data in this report references Dodge Data & Analytics Starts data.

Care must be taken to use Starts data properly. It is regularly misinterpreted in common industry forecasting articles. Starts dollar values represent a survey of about 50% to 60% of industry activity, therefore Starts dollar values cannot ever be used directly to indicate spending. Also, Starts do not directly indicate changes in spending per month or per year. Only by including an expected duration for all Starts and producing a forecast Cash Flow from Starts data can the expected pattern of spending be developed. Finally, it is the rate of change in Starts Cash Flows that gives an indication of the rate of change in spending.

Cash flow is the best indicator of how much and when spending will occur. Cash flow from DDA starts gives a prediction over time of how spending from each month of previous starts will occur from all projects in backlog. Cash flow totals of all jobs can vary considerably from month to month, are not only driven by new jobs starting but also old jobs ending, and are heavily dependent on the type, size and duration of jobs.

Index of Actual Spending and Starts Cash Flows 2015-2018 2-10-18

Nonresidential Buildings

Retail/Commercial starts may finish flat or up just slightly for 2017, but that is compared to peak starts in 2016. Starts for the 12 months Aug 2016 – June 2017 posted 10% growth over the previous 12 months. Retail/Commercial starts have been increasing every year since 2010. In 2010, Warehouse starts were only 1/3 of Store new starts. In 2018, Warehouse starts will be 50% greater than Store starts. Warehouse starts have increased between 20%-40%/year for seven years and are now five times greater than in 2010.

Office construction starts have been increasing since 2010 with the strongest growth period of new starts in the 12 months July 2016 – June 2017, the highest 12 months on record, 60% higher than the previous 12 months. That high-volume period of starts is going to elevate spending in both 2018 and 2019 to come in higher than 2017. Office starts averaged year-over-year (YOY) growth of 20%/year for the last five years. Data centers are included in Office.

Educational starts are up 7% in 2017. Starts have averaged YOY growth of 8%/year for the last two years and have had slow but steady growth since 2012. The growth in starts will support growth in spending or the next three years.

Office, Retail and Educational markets comprise 60% of all nonresidential buildings. They are collectively responsible for 70% of the increase in 2017 nonresidential buildings starts.

Healthcare starts have quietly increased to a record high over the last 12 months, up 30% for the 12 months through August vs the previous 12 months.

Lodging starts may be flat or will be up only slightly in 2017, but from 2010 to 2016 averaged over 30%/year growth for six years. In 2018, Lodging may return to  that six-year average growth.

Manufacturing is the only nonresidential building market that will NOT finish 2017 with new starts totals at or near post-recession highs. Manufacturing reached record high starts in 2014 and record spending in 2015. However, 2017 will post new starts 50% higher than initially predicted by Dodge.

Manufacturing spending was expected to fall in 2017 after peaking in 2015 from massive growth in new starts in 2014. Based on cash flows from starts, spending was expected to decline in 14 of the last 18 months. It did decline in 11 of those months. We are at the point of turn-around with only 1 monthly decline predicted in the next 3 months and no spending declines expected next year.

Non-building Infrastructure

Sewer/Water/Conservation, the three Environmental Public Works markets, posted declines in new project starts in 3 (sewer) or 4 of the last 4 years. Collectively, new starts in 2017 are the lowest in 5 years. Cash flow predicted from starts has been indicating spending declines since Q2-2016. In fact, spending has declined in 12 of the last 18 months. Cash flow still indicates more spending declines over the next 8 months.

Highway/Bridge/Street starts in the 2nd half of 2014 recorded the slowest rate of growth in the last 6 years. Starts that would normally be contributing spending through 2017 and into 2018 contributed a lower than normal volume of spending which will end in 2017. Had it not been for the extremely high volume of starts in the 1st 4 months of 2014, the most ever recorded in 4 consecutive months, 2017 spending would have dropped more than double the 4% spending decline now forecast.

Highway starts in the 1st 6 months of 2015 posted the next highest growth to early 2014. Spending in 2018 will benefit from those projects that started in 2015 but that have unusually long duration. They will contribute a higher rate of spending in 2018 beyond the duration that typical projects would have ended. It is not recent new starts but old backlog that is influencing 2017 and 2018 highway spending.

Transportation Terminal starts in the first three months of 2017 were more than three times higher than any three-month period in the previous five years. While this helped turn 2017 spending positive, 2017 is still affected by uneven starts from two to three years ago holding down gains in the 2nd half. Transportation will show only a 2% gain in 2017 spending but will post strong double digits gains in 2018 and again in 2019. Terminal buildings is reported in Dodge Starts in Other Institutional Buildings. However Census reports terminal spending in Transportation along with Rail and Dock spending. I adjust the starts data in my reports to conform to the Census construction spending reports.

Power market starts peaked in 2015 at an all-time high, up 142% from 2014 and more than the prior two years combined. The Power market was the prime contributor to the abnormally high infrastructure starts in the 1st 6 months in 2015. Power spending was down 6% in 2015 and up only 3% in 2016 because Power starts were also at an all-time high in 2012, just below the 2015 level, and those starts drove 2014 spending to an all-time high, but then spending from those old jobs tapered off in 2015.

Power starts dropped 11% in 2016 and are down slightly in 2017. Recently, there has been an unexpected large volume of power plant and pipeline starts that are driving 2017 power starts to come in about 40% higher than initially expected.

Even though Power starts have been declining since the 2015 high point, Power had several periods with an exceptionally high value of new starts, some of these periods 2x to 3x the normal rate of growth and a year or two longer duration than typical; late 2014, Jan-May 2015, Feb-Jun 2016 and again in Feb-Jul 2017. A large share of the cash flow, or monthly spending, from all those exceptional starts will occur in 2018 and 2019 and will drive spending to 10%+ gains.

Although starts are not tracked for Public vs Private, Highway, Educational, Environmental Public Works and Transportation make up more than 80% of all Public construction. Only Environmental Public Works starts are down. Educational, Transportation and Highway all have a positive outlook in new starts and predicted spending for 2018 which pushes public spending to post-recession highs.

Here’s how to use the Starts data and how it affects spending Construction Starts and Spending Patterns 9-26-17

Also, after New Starts, dollars are then tracked in Backlog, Backlog Construction Forecast Fall 2017  11-10-17

See the Spending Forecast Spending Summary Construction Forecast Fall 2017  12-2-17

 

Ahead of the Sept Construction Spending Forecast

10-25-17

On November 1, September construction spending will be released. The September spending release is always a solid turning point for the 2017 forecast. Here’s a few facts leading into the forecast which will incorporate this data and be posted soon after the 11-1-17 spending release.

2017 construction spending will come in at $1,250 billion, up 5.5% from 2016.

Largest $ contributors to growth in 2017 spending: Residential $56b, Commercial Retail $12b, Office $6b.

Largest $ declines in 2017 spending: Manufacturing -$8b, Public Works -$6b.

Total construction spending averaged 8%/yr growth last 6 yrs (2014 & 2015 at 11%). Expect 6% in 2018, 5% in 2019

Construction spending on Infrastructure leads growth for the next 3 years and it has nothing to do with an infrastructure spending bill.

Infrastructure spending in 2018 is led by Power and Transportation markets.

Most of the 2018 spending in the Power market will be generated from starts in 2016. Equally strong 2017 starts will generate most of the Power spending in 2019.

Public construction spending in 2018 will reach highest yr/yr growth rate in over 10 years powered by Educational spending.

Commercial/Retail spending in 2018 slows but most other nonresidential buildings still show strong growth, especially Office and Educational.

Residential spending slows to a crawl after more than 100% growth in last 6 years. Currently predicting only 5% to 6% growth over next 2 years.

Residential spending may change during the year because, while spending in all other markets is dependent on starting backlog, residential spending is primarily dependent on new starts within the year

Largest $ contributors to growth in 2018 spending: Power $22b, Office $15b, Educational $10b, Transportation $5b.

Largest $ declines in 2018 spending: none greater than -$2b.

 

Nonresidential Buildings and Infrastructure construction will both hit new all-time highs for starting backlog in 2017 and 2018. Both will see a 9% increase in spending in 2018.

Backlog incld Res Starts 2005-2018 10-26-17

Infrastructure construction spending never dropped due to the recession as much as Nonresidential Buildings or Residential.

Nonres Bldgs dropped 35% from $438bil in 2008 to $284bil in 2011.

Residential dropped 60% from $630bil in 2005 to $252bil in both 2010 and 2011.

Infrastructure declined only 8% from $274bil in 2009 to $251bil in 2011. It rebounded to $305bil in 2015, a new high.

Nonres Bldgs spending is just 3% below the previous high but residential is still 16% below 2005.

 

In constant$, adjusted for inflation, Nonres Bldgs peaked at $537bil in 2000 and Residential peaked at $755bil in 2005.

Nonres Bldgs is still 21% below the inflation adjusted peak. Residential is still 30% below.

Infrastructure reached an inflation adjusted peak in 2009 at $300bil. It hit a new high in 2016 at $313bil and in currently down 6% from that high. It will set a another new high in 2018.

Spend current vs constant INFRA 1993-2018 plot 10-25-17

Watch for the new 2017-2018 Spending Forecast to be posted within the week after the September data is released 11-1-17.

These other recently posted articles also have information relative to the 2017-18 forecast

Is Infrastructure Construction Spending Near All-Time Lows?

Construction Starts and Spending Trends 2017-2018

 

Construction Starts and Spending Patterns

9-26-17

Construction Starts and Spending trends may not be apparent unless you look deep into the last few years of data.

Construction spending is strongly influenced by the pattern of continuing or ending cash flows from the previous two to three years of construction starts.

Current month/month, year/year or year-to-date trends in starts often do not indicate the immediate trend in spending.

Power market starts and spending provides a good example. Power starts peaked in 2015 at an all-time high, up 142% from 2014 and more than the prior two years combined. Yet Power spending was down 6% in 2015 and up only 3% in 2016. This happened because Power starts were also at an all-time high in 2012, just below the 2015 level, and those starts drove 2014 spending to an all-time high, but then tapered off in 2015. Those peak starts from 2015 will still be contributing spending for several years to come, long beyond typical jobs, and that drives up typical spending growth because it adds more than typical number of months that contribute spending.

Power starts dropped 11% in 2016 and continue to drop in 2017. Year-to-date and year over year comparisons to 2016 show Power starts down in all respects. For the 1st six months of 2017, Power starts are down four out of six months compared to same month in 2016 and year-to-date through June is down a total 20%.

Even though Power starts have been declining since the 2015 high point, Power had several periods with an exceptionally high value of new starts, some of these periods 2x to 3x the normal rate of growth and a year or two longer duration than typical; late 2014, Jan-May 2015, Feb-Jun 2016 and again in Feb-Jul 2017. When we have old, long duration jobs that are still contributing to monthly spending, spending goes up. A large share of the cash flow or monthly spending from all those exceptional starts will occur in 2018 and 2019. Those jobs will elevate Power spending 15% to 20% in 2018 and also in 2019.

  • Pattern of cash flows from construction starts is indicating substantial acceleration in spending over next six months in all sectors, perhaps most notable in infrastructure.
  • Infrastructure jobs from 2014 with longer than average duration will continue into 2018. These break the average balanced cycle of one month of old jobs ending for every new month of jobs starting. That will increase spending in 2018.

This simplified example shows what happens to monthly spending growth when a long duration job first influences spending past the typical duration and then when it ends. In the example here, starts grow at 1% per month and have a typical duration of 5 months. One month has an unusually large project start that will last for 10 months. A typical month of spending has cash flow from 5 months of starts, but the long duration project creates 6 months of cash flows for the period beyond typical duration.

Notice what happens and when it occurs. When the large project starts it has no unusual affect on spending. When it first extends beyond typical duration, it has a massive +20% growth effect on spending, even though starts had only been increasing at 1%/month for the previous 5 months. When it ends it has a similar downward effect, again, even though starts had been increasing at 1%/month.

Spending growth (or declines), both when an extra large job causes it to increase and then when the extra job ends, is almost entirely influenced by the long duration project, not by normal monthly starts growth rate.

Starts vs Spending Example 9-27-17

2017 construction spending is expected to approach $1,250 billion, up 6% from 2016. Average annual rate of spending is going to increase 5% from $1,240 to $1,300 at year end. I wouldn’t be surprised to see future revisions to Mar-Apr-May spending smooth out that erratic period and add to total $ 2017.

  • All sectors have already hit spending lows for the year and will increase 4% to 8% over the next six months.
  • Infrastructure will finish the year with totals down 2% to 3%, but the annual rate of spending could potentially increase 8% from July to year end. 2018 shows 10% growth.
  • Nonresidential Buildings are up 4% in 2017, the sixth consecutive year of growth. For 2018 expect 8% growth.
  • Residential spending will be up more than 10% for 2017, the sixth year over 9%. Spending growth in 2018 slows to 5%.

Starts CF 9-27-17

2017 construction starts through August total $482 billion, down 1% compared to revised 2016. If 2017 gets revised as expected, even by only 4%, it will show +3% growth over 2016, but we won’t see that growth in the data until next year.

  • Starts revisions for the period 2008-2015 averaged +5.8%/yr. For the period 2012-2015 revisions averaged +4.0%.
  • The smallest revision to starts data since 2008 was +3.5%/yr. 2016 year-to-date through August revisions are +11%.
  • Previous year starts are always revised upwards. Therefore, current year starts year-to-date growth is always understated.
  • Starts have been increasing at an average rate of 11%/year for the last 5 years.
  • After revisions, I expect 2017 will be the highest amount of new construction starts in 13 years.

Manufacturing spending was expected to fall in 2017 after peaking in 2015 from massive growth in new starts in 2014. However, a few months of exceptional 2015 starts will elevate 2018 spending and late 2016 starts will elevate 2019 spending.

Office spending, down slightly (temporarily) due to timing of completions from old jobs, is on track to reach 10% growth in 2017. Starts have been increasing since 2010 with the strongest growth period of new starts from Sept 2016 through June 2017. So, for the next 10 months we may see year/year comparisons negative, but that high volume of starts from Sept 2016 to June 2017 is going to elevate spending in 2018 and 2019.

Commercial spending early reports for June and July are both well below that predicted by starts cash flows and may be prone to substantial revisions. Commercial spending revisions have been up 17 of last 18 months an average of 6.0%/month. (10-2-17 Commercial spending was revised up by 4% for both June and July) Commercial starts have been increasing every year since 2010.

Educational has seen a slow but steady growth in new starts since 2012. Current dip in spending are not expected to continue. Cash flow from starts is indicating a steady climb in spending from now through the end of 2018.

Healthcare starts from 2015 are ending unevenly, rather than smoothly, causing temporary dips in spending. Growth resumes by Sept-Oct.

Transportation Terminal starts in the first three months of 2017 were more than three times higher than any three-month period in the previous five years. While this helped turn 2017 spending positive, 2017 is still affected by uneven starts from two to three years ago holding down gains in the 2nd half. Transportation will show only a 1% gain in 2017 but  double digits gains in 2018. The high volume of 2017 starts has the most affect on 2019 spending.

Highway spending in 2018 will benefit from a scenario exactly as described above in the cash flow chart. Projects that started in 2015 but that have unusually long duration will contribute spending in 2018 beyond the duration that typical projects have ended. It is not recent new starts but old ongoing projects that will increase 2018 spending by 6%.

Public Works cash flow from starts has been indicating declines in spending since last summer. In fact, declines in public works spending (down 20% YTD in Sewage Waste Disposal) is the biggest drag on Infrastructure spending in 2017. However, now spending declines are expected to turn to growth in the 2nd half 2017 and continue growth through 2018.

(This analysis does not include any spending projections from an infrastructure investment bill).

See August Construction Spending 10-2-17 for more trends in spending.

See Starts Trends Construction Forecast Fall 2017 11-8-17 for updated trends in New Starts.

See Backlog Construction Forecast Fall 2017 11-5-17  for updated trend in Starting Backlog for 2018

Nonres Bldgs Construction Spending Midyear 2017 Forecast

7-24-17

The AIA recently published the Nonresidential Buildings Consensus Forecast Midyear 2017 report. The consensus of seven firms projects spending growth for nonresidential buildings at 3.8% for 2017 and 3.6% for 2018. The largest growth in the AIA forecast for any building type for both years is 10% for 2017 Retail & Other Commercial. The highest reported total annual prediction from any firm is 4.4% for 2017 and 5.5% for 2018. AIA Midyear Consensus Report July 2017

Construction Analytics forecast for nonresidential buildings construction spending growth is +7.3% for 2017 and +10.7% for 2018. Growth in 2016 was 7.5%. 

Year-to-date (YTD) spending for the 1st 5 months of 2017 is up +5.2%, led by Office and commercial, both near 15%. Estimate-to-complete (ETC) for the final 7 months is forecast at +8.1%. Total spending for Nonresidential Buildings in 2017 is forecast to increase 7.3% = $438 billion.

Compare Consensus 2017 July Forecast 7-26-17

If spending were to slow to 3.8% growth for 2017, since YTD growth is already 5.2%, the rate of growth in the final 7 months would need to fall to only 2.4%. However, the predicted cash flow from construction starts shows very strong spending growth in the 2nd half 2017 and into 2018. Nonresidential Buildings construction starts for the last 12 months posted the highest average since 2007-2008. This is helping boost spending.

Outside of recession years, nonresidential buildings construction spending for the year dropped below 4% annual growth only twice in 24 years, since data has been tracked. In fact, right now spending needs to grow at 4.5% just to stay ahead of construction inflation. So any forecast of spending growth below 4.5% actually might suggest that construction is not expanding, but is contracting. All indications are that there are no recessionary effects right now and economic activity does not suggest we are headed for a non-recession low spending for nonresidential building construction. I don’t expect spending to drop to 4% growth for the next three years.

The pattern of nonresidential buildings construction starts for the last 30 months is indicating spending increases in the 2nd half of 2017 and is setting up 2018 for the highest ever starting backlog and record spending. Even if starts crash to zero growth for the remainder of the year, 2017 spending would drop by less than 1% and we still begin 2018 with record backlog.

Spend Nonres Bldgs May 2017 7-24-17

New Office construction starts for the last 12 months are the best ever recorded, on track to reach a total 50% growth over two years. Retail/Commercial starts have averaged year-over-year (YOY) growth of greater than 10%/year for the last three years. Educational starts averaged YOY growth of 8%/year for the last two years. These three markets comprise 60% of all nonresidential buildings. Healthcare starts have quietly increased to a record high over the last 12 months. Every market except manufacturing will finish 2017 with new starts totals near or at post recession highs. Manufacturing reached record high starts in 2014 and record spending in 2015. All construction starts $ data in this report references Dodge Data & Analytics starts data.

Construction spending for Commercial/Retail, Lodging and Office construction all remain very strong with 2017 total growth near 15%. Educational (+9%) and healthcare (+4%) both show sizable gains after years of little to no growth.

92% of all construction spending in 2017 is already in backlog projects.

A scenario that would have Office spending drop down to 8.9% annual growth from the track it is on today (+15.4% YTD) would require a highly improbable and unprecedented non-recessionary decline in spending in the remaining months of 2017. To grasp the enormity of the decline needed, it would take canceling 8% of all ongoing office projects or new starts for the remainder of the year would need to drop by 50%.

Spend OFFICE COMM 2017 2018 7-24-17

Educational will show an increase in YTD gains in the 3rd quarter because increasing spending in 2017 will be measured against the lowest quarter (3rdqtr) in 2016. Healthcare may not show sizable YTD gains until 4th quarter, for which 2016 reached lowest spending of the year and 2017 will reach highest.

Spend Institutional 2013-2018 8-9-17

Total nonresidential buildings spending growth accelerates to 10+% in 2018, led by institutional and office spending.

Nearly all nonresidential buildings construction starts in 2016 are still contributing to spending. Since originally posted they have been revised up by 16%. Since most spending from new starts (approximately 50%) occurs in the year following the start, early spending projections based on original posted starts $ may understate 2017 spending.

Spend Nonres Bldgs asof May17

Nonresidential construction is comprised of two very different sectors, nonresidential buildings and non-building infrastructure. Infrastructure spending is quite erratic, while nonresidential buildings spending, with only slight variation, has been climbing at a strong steady pace for more than 4 years. Some analysts track nonresidential total spending, but these two sectors perform so differently it is important to break them apart to track trends. Buildings spending is up 2% from Q2’16 and up 5% YOY. In the 2nd half 2017 YOY spending is expected to reach 8% over the same months from 2016. Worthy of note is that non-building infrastructure spending, even though down slightly, just experienced two years of record highs. It will hold down the overall nonresidential total performance, but still finish 2017 near record highs.

See this article from February comparing my starting forecast compared to the Jan 2017 AIA Consensus Nonresidential Bldgs 2017 Forecasts Vary

 

Behind The Headlines – Construction Starts

3-21-17

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.

 

 

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