Rock Products

SEP 2018

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Page 54 of 61 ROCK products • September 2018 • 53 ECONOMICS New construction starts in June climbed 11 percent to a seasonally adjusted annual rate of $896.3 billion, according to Dodge Data & Analytics. The increase marked the second dou- ble-digit gain in a row, following the 15 percent hike that was reported for May. Highway and bridge construction was up 25 percent. Boosting activity in June was a sharp 57 percent advance for nonresiden- tial building, which benefitted from the start of two massive manufactur- ing plant projects and two massive office-building projects. The two large manufacturing projects were a $6.5 billion uranium processing facility in Oak Ridge, Tenn., and a $1.7 billion petrochemical plant in Port Arthur, Texas, while the two large office proj- ects were the $1.8 billion Spiral office tower in New York and a $665 million office tower in Chicago. Residential building in June grew 4 per- cent, helped by growth for multifamily housing. The nonbuilding construc- tion sector (public works and electric utilities) retreated 28 percent in June, pulling back after the sharp 37 percent increase reported in May that reflected the start of several large natural gas pipelines and rail-related projects. "The monthly pattern for construction starts will often reflect the presence or absence of very large projects, and after May received a lift from unusually large projects, it was even more true in June," stated Robert A. Murray, chief economist for Dodge Data & Analytics. "Following the lackluster activity in April, the strength shown during May and June enabled the second quarter average for total construction starts to be up 3 percent from the first quarter, which itself was up 2 percent from the final three months of 2017. On that basis, one can say that the expansion for construction starts continued at a modest pace during the first half of 2018. At the same time, it's not expected that July will get the same support from large projects that took place in June. Nonresidential building in June was $402.3 billion (annual rate), up 57 percent from May. The manufacturing building category received an 18-fold increase in June relative to a weak May, with the primary boost coming from the June start of the U.S. Department of Energy's $6.5 billion uranium pro- cessing facility in Oak Ridge, Tenn. This massive project will support the nation's nuclear weapons stockpile and provide uranium for fuel for U.S. Navy submarines and aircraft carriers. If this project is excluded from the June construction start statistics, manufac- turing building in June would still have shown a five-fold increase, while non- residential building would have been up 26 percent and total construction starts would have been up 2 percent. The other large manufacturing build- ing project entered as a June start was a $1.7 billion petrochemical plant expansion and ethane steam cracker plant in Port Arthur, Texas. The com- mercial building categories as a group climbed 25 percent in June, advancing further after moderate gains in April (up 5 percent) and May (up 7 percent). Office construction surged 53 percent in June, led by the start of the $1.8 billion, 64-story Spiral office tower in the Hudson Yards district of New York, as well as the start of a $665 mil- lion, 54-story office building on North Wacker Drive in Chicago. Other large office projects in June were a $200 million data center in Ashburn, Va., a $200 million office tower in Denver and a $145 million data center in Mesa, Ariz. Other commercial categories posting June gains were commercial garages, up 22 percent; store construction, up 18 percent; and warehouses, up 14 percent. The warehouse category was helped by such large projects as a $150 million Amazon distribution center in the Birmingham, Ala., area and a $107 million warehouse complex in Fre- mont, Calif. Hotel construction was the one com- mercial project type to report a June decline, sliding 15 percent, although the latest month did include the start of several large hotel projects in New June Construction Starts Jump 11 Percent Nonresidential Building Soars, Highways Up 25 Percent. By Mark S. Kuhar MONTHLY CONSTRUCTION STARTS (Seasonally Adjusted Annual Rates, In Millions of Dollars) June 2018 May 2018 % Change Nonresidential Building $402,273 $256,962 +57 Residential Building $323,013 $311,678 +4 Nonbuilding Construction $171,034 $236,011 -28 TOTAL Construction $896,320 $804,651 +11 Source: U.S. Dept. of Commerce

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