Total construction starts in the US grew by 3.7 per cent in 2015 to reach US$527 billion, a slowdown from the 7.4 per cent growth posted in 2014 said a new report by Construction Market Data Group, published February 5.
US 2015 Construction Starts Snapshot: CMD
by ABBY SAMP, OXFORD ECONOMICS, for Daily Commercial News
Total construction starts in the US grew by 3.7 per cent in 2015 to reach US$527 billion, a slowdown from the 7.4 per cent growth posted in 2014.
The civil engineering sector provided the main impetus for growth, with strong construction of roads, bridges, and other engineering works fuelling annual growth of 10.8 per cent. New construction of residential buildings was also relatively solid in 2015, growing by 6.3 per cent on the year, as double-digit growth in the single-family segment was countered by a decline in starts of multi-family units. In contrast, non-residential building construction declined by 3 per cent in 2015. This came against a backdrop of steady, yet unspectacular, economic growth; GDP is estimated to have grown by 2.4 per cent (based on data through Q3).
North of the border, Canadian construction starts plummeted by 15.6 per cent in 2015. Shrinking investment in the mining sector dragged down civil engineering starts by 27.8 per cent. Residential starts posted a shallower contraction of 3.8 per cent, while non-residential building starts grew by 6.6 per cent. The contraction is hardly surprising, given the difficult macroeconomic background – Canadian GDP growth slowed to an estimated 1.2 per cent in 2015 (based on data through Q3).
US Year In Review
Among the four major regions, 2015 construction starts were strongest in the South and the Midwest, growing by 9.1 per cent and 8.4 per cent respectively. The strength in the South has likely resulted from solid economic growth (GDP grew by 2.7 per cent). The strength in the Midwest was driven by engineering construction projects, which tend to be less cyclical.
Construction starts in the West were less rosy, growing by just 1.9 per cent in 2015. This came despite solid economic growth, strong demographics and a large potential scope for catch up in all of the regions. Nonetheless, residential construction, which saw the biggest collapse during the global financial crisis, grew by a respectable 10.4 per cent in 2015, although it remains more than 45 per cent below its pre-crisis peak. Total starts in the Northeast, by contrast, declined by 12.1 per cent in 2015. Much of this was due to harsh weather in the first quarter.
Canada Year In Review
The weakness in residential construction was concentrated in the Atlantic region and the Prairies, the regions with the lowest economic growth. In contrast, residential starts in the “frothy” markets around Toronto and Vancouver continued to grow strongly. Total residential starts in both British Columbia and Ontario grew by around 7 per cent.