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FEB 2018

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www.rockproducts.com ROCK products • February 2018 • 63 ECONOMICS The U.S. Census Bureau announced that construction spending was esti- mated at a seasonally adjusted annual rate of $1,257.0 billion, 0.8 percent (±1.2 percent) above the revised Octo- ber estimate of $1,247.1 billion. The November figure is 2.4 percent (±1.5 percent) above the November 2016 estimate of $1,227.0 billion. During the first 11 months of this year, construction spending amounted to $1,138.3 billion, 4.2 percent (±1.0 per- cent) above the $1,091.9 billion for the same period in 2016. Public Construction In November, the estimated seasonally adjusted annual rate of public con- struction spending was $292.7 billion, 0.2 percent (±2.0 percent) above the revised October estimate of $292.0 billion. Highway construction was at a seasonally adjusted annual rate of $88.0 billion, 0.8 percent (±4.6 percent) below the revised October estimate of $88.7 billion. Private Construction Spending on private construction was at a seasonally adjusted annual rate of $964.3 billion, 1.0 percent (± 1.0 percent) above the revised October estimate of $955.1 billion. •  Residential construction was at a sea- sonally adjusted annual rate of $530.8 billion in November, 1.0 percent (±1.3 percent) above the revised October estimate of $525.3 billion. •  Nonresidential construction was at a seasonally adjusted annual rate of $433.5 billion in November, 0.9 per- cent (± 1.0 percent) above the revised October estimate of $429.7 billion. "The November report represented a stark reversal of preexisting trends," said Associated Builders and Contrac- tors (ABC) Chief Economist Anirban Basu. "For much of the past several years, the pattern in nonresidential construction spending has been one in which a number of private categories expanded briskly, including lodging and office, while a host of public construc- tion categories experienced sluggish spending. That changed in November, with public construction spending rising and private construction spend- ing shrinking on a year-over-year basis. "There are several possible explana- tions, including growing concerns about overbuilding in a number of large met- ropolitan areas in the lodging, office and commercial categories," said Basu. "Financiers may also be less willing to supply financing to a variety of private projects given such concerns. At the same time, the U.S. housing market is the strongest it has been in at least a decade, raising sales prices and expand- ing assessable residential tax bases. That in turn has supplied additional resources for infrastructure. Over the past year, this has been particularly apparent in the educational and public safety categories." Economic Panel Predicts The newly enacted tax law will create a more favorable tax climate for the busi- ness community, which should spur job and economic growth and keep single-family housing production on a gradual upward trajectory in 2018, according to economists speaking at the National Association of Home Builders (NAHB) International Builders' Show. "We expect that tax reform will boost GDP growth to 2.6 percent in 2018, and this added economic activity will also bode well for housing, although there will be some transition effects in high-tax jurisdictions," said NAHB Chief Econo- mist Robert Dietz. "Ongoing job creation, expected wage increases and tight exist- ing home inventory will also boost the housing market in the year ahead." However, builders will continue to deal with ongoing supply-side head- winds this year that will dampen more robust growth. These factors include an increasing number of unfilled con- struction jobs, a shortage of buildable lots, and a slow growth in acquisition, development and construction loan activity that is failing to keep pace with rising demand. In addition, regulatory costs stemming from building codes, land use, environ- mental and other rules have jumped 29 percent in the past five years, and this has had a significant impact on housing affordability. The ongoing U.S.-Canada softwood lumber trade dispute is fur- ther exacerbating the situation, as the price of softwood lumber has increased 20 percent from a year ago. The Forecast As the economy continues to strengthen, NAHB expects 30-year fixed-rate mort- gages will average 4.31 percent in 2018 February Economic Update Construction Spending Rises; Economics Panel Predicts Housing Market; Great Lakes Stone Shipments. By Mark S. Kuhar MONTHLY CONSTRUCTION STARTS Value of ConstrucƟon Put in Place, Seasonally Adjusted (Spending on Highways) Month Millions of Dollars Nov.2017 88,223 Oct. 2017 88,911 Sept. 2017 86,516 Aug. 2017 84,753 July 2017 85,570 Source: U.S. Dept. of Commerce

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