Rock Products

JUL 2017

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54 • ROCK products • July 2017 www.rockproducts.com ECONOMICS At a seasonally adjusted annual rate of $651.2 billion, new construction starts in May increased a slight 1 percent from April, according to Dodge Data & Analytics. Public works construc- tion bounced back 30 percent from its subdued April amount, helped by the May start of four large pipeline projects totaling a combined $3.0 billion. This enabled the nonbuilding construction sector (which also includes electric utilities and gas plants) to register a 23 percent gain in May, offsetting modest 4 percent declines for both nonresiden- tial building and housing. "While May revealed slight improve- ment over April, the pace of expansion so far this spring has generally slowed following the elevated activity in the first quarter," stated Robert A. Murray, chief economist for Dodge Data & Analytics. "This is consistent with the up-and-down behavior that's often been present in the current expansion, and a continuation of this pattern means that renewed strengthening can be expected in the months ahead. On the plus side, long-term interest rates remain quite low, with the 10-year Treasury bill rate easing back to 2.2 percent even as the Federal Reserve raised the federal funds rate another quarter point last week. Numerous state and local bond measures passed in recent years are providing near term support for public works and institutional building. The expected benefits of a new federal infrastructure program, assuming one gets passed during the second half of 2017, would affect construction activity more in 2018. And, while vacancy rates for commercial building and multifam- ily housing are beginning to rise, the increases witnessed so far have been generally small." Nonbuilding Construction Nonbuilding construction in May was $146.9 billion (annual rate), up 23 per- cent. The public works categories as a group climbed 30 percent, rebounding from a 48 percent decline in April, as the "miscellaneous" public works category (which includes pipelines) soared 166 percent. The largest pipeline project entered as a construction start in May was the $1.5 billion Revolution Pipeline expansion in western Pennsylvania, which includes a 100-mile natural gas pipeline gathering system that will feed into a cryogenic gas processing plant. Also entered as a May start were the $690 million Gulf South Coastal Bend Header project in Texas that will deliver natural gas to a liquefaction terminal in Freeport; the $500 million Atlantic Bridge natural gas pipeline expansion in the Northeast (New York, Connecti- cut, Massachusetts, Maine); and the $300 million Cameron Access natural gas pipeline expansion in Louisiana. Highway and bridge construction in May grew 5 percent, helped by a $192 million highway project in San Antonio and a $125 million bridge improvement project in the Macon, Ga., area. The top five states in terms of the dollar amount of new highway and bridge construc- tion starts in May were Pennsylvania, Texas, California, Georgia and Florida. The environmental public works cat- egories retreated in May, with river/ harbor development, down 5 percent; water supply construction, down 9 per- cent; and sewer construction, down 11 percent. The electric utility/gas plant category dropped 3 percent in May after its 71 percent hike in April, with the largest May projects being a $500 million natural gas-fired power plant in Pennsylvania, a $259 million trans- mission line in California, and a $240 million wind power facility in Texas. Nonresidential Building Nonresidential building, at $219.3 bil- lion (annual rate), slipped 4 percent in May. The commercial categories as a group fell 10 percent, with office con- struction dropping 40 percent following gains of 41 percent in March and 23 percent in April. The two largest office projects entered as May starts were the $300 million American Airlines Trinity MONTHLY CONSTRUCTION STARTS (Seasonally Adjusted Annual Rates, In Millions of Dollars) May 2017 April 2017 % Change Nonresidential Building $219,269 $229,314 -4 Residential Building $284,941 $296,874 -4 Nonbuilding Construction $146,942 $119,451 +23 TOTAL Construction $651,152 $645,639 +1 New Construction Starts in May Edge Up 1 Percent Public Works Construction Strengthens, Nonresidential Building and Housing Recede; Highways Up. By Mark S. Kuhar

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