Rock Products

OCT 2018

Rock Products is the aggregates industry's leading source for market analysis and technology solutions, delivering critical content focusing on aggregates-processing equipment; operational efficiencies; management best practices; comprehensive market

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56 • ROCK products • October 2018 At a seasonally adjusted annual rate of $817.4 billion, new construction starts in July fell 9 percent from the elevated pace reported in June, according to Dodge Data & Analytics. The latest month's decline followed strong gains for total construction starts during the previous two months, with May up 14 percent and June up 11 percent. By major sector, nonresidential build- ing dropped 22 percent after soaring 59 percent in June, which had been lifted by the start of two massive manufac- turing plants and two massive office buildings. While July did see several large manufacturing and office proj- ects reach groundbreaking, they were not the same magnitude as what took place in June. Highway and bridge construction grew 8 percent. The other two major sectors in July held close to their June amounts, with residential building up 2 percent and nonbuilding construction unchanged. "The pattern of construction starts on a monthly basis is often affected by the presence or absence of very large proj- ects, and several exceptionally large projects boosted activity in June to an unsustainably high amount," stated Robert A. Murray, chief economist for Dodge Data & Analytics. "These June projects included a $6.5 billion ura- nium processing plant in Tennessee and a $1.7 billion petrochemical plant in Texas, as well as the $1.8 billion Spiral office tower in New York and a $665 million office tower in Chicago. While July also featured the start of several large projects, such as a $2.4 billion petrochemical plant in Texas and a $750 million data center in Alabama, the lift from very large projects in July was less than what took place in June. Still, the pace of construction starts in July came in 2 percent above the aver- age for the second quarter, which is consistent with the sense that overall construction starts continue to trend upward, notwithstanding July's steep decline compared to June. The current year has seen the mounting headwinds of higher material prices and higher interest rates, but it's also seen the tailwinds of healthy economic growth, some easing of bank lending standards, and the increased funding for public works programs coming from the fed- eral appropriations legislation passed in March. Amidst the monthly ups-and- downs, the broad trend for construction starts during 2018 remains one of modest expansion." Nonresidential Building Nonresidential building in July was $318.0 billion (annual rate), down 22 percent from June's heightened volume. The manufacturing plant category plunged 60 percent from June, which had been boosted in particular by the U.S. Department of Energy's $6.5 bil- lion uranium processing facility in Oak Ridge, Tenn. If this project is excluded from the June construction start sta- tistics, manufacturing building in July would have shown a 37 percent gain, while only modest declines would have been reported in July for nonresidential building, down 3 percent; and total con- struction, down 1 percent. July did include the start of a $2.4 billion petrochemical plant in Channelview, Texas, and a $400 million submarine manufacturing facility in North Kings- town, R.I. The commercial building categories as a group slipped 5 per- cent in July after a 25 percent increase reported in June. Office building in July was down 23 per- cent despite groundbreaking for three very large data centers – a $750 million Facebook data center in Huntsville, Ala., a $600 million Google data center in Stevenson, Ala., and the $288 million Sentinel data center in Sterling, Va. Large office buildings that reached groundbreaking in July were the $250 million office portion of the $330 million Block 71 mixed-use building in Austin, Texas, a $181 million office building in Chicago and a $97 million Avalon office building in the Atlanta area. Warehouse construction starts eased back 1 percent in July, although the latest month featured the start of three Amazon fulfillment centers located in Spokane, Wash. ($181 million), Tulsa, Okla. ($150 million) and Burlington, N.J. ($150 million). ECONOMICS MONTHLY CONSTRUCTION STARTS (Seasonally Adjusted Annual Rates, In Millions of Dollars) July 2018 June 2018 % Change Nonresidential Building $318,002 $406,471 -22 Residential Building $326,544 $320,742 +2 Nonbuilding Construction $172,808 $172,026 -0- TOTAL Construction $817,354 $899,239 -9 Source: U.S. Dept. of Commerce New Construction Starts in July Slide 9 Percent Public Works Categories as a Group Were Up 1 Percent; Highway and Bridge Construction Grew 8 Percent. By Mark S. Kuhar

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