Rock Products

DEC 2018

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Page 28 of 99

ROCKproducts • December 2018 • 27 • Manufacturing plant construction will rise 2 percent following the 18 percent jump that's estimated for 2018. The recent pickup in pet- rochemical plant projects should continue, and cuts in the corporate tax rate from tax reform should encourage firms to invest more in new plant capacity. • Public works construction will increase 4 percent, reflecting growth by most of the project types. The omnibus federal appropriations bill passed in March provided greater funding for transportation projects that will carry over into 2019, and environmental-related projects are getting a lift from recently passed legislation. • Electric utilities/gas plants will drop 3 percent, continuing to retreat after the exceptional amount reported back in 2015. New generating capacity continues to come on line, dampening capacity utilization rates for power generation. Construction Spending Construction spending hit a seasonally adjusted annual rate of $1.329 trillion and grew 5.5 percent for nine months of 2018 combined, with continued year-to-date gains for major public and private categories, according to an analysis of new government data by the Associated General Contractors of America. Association officials said that while demand for construction should remain strong for the next several months, the construction sector could be impacted by new trade tariffs, con- tinues workforce shortages and higher interest rates. "Construction spending has increased among nearly every project type and geographic area this year," said Ken Simonson, the association's chief economist. "Despite month-to-month fluctuations, the outlook remains pos- itive for modest to moderate increases in most spending categories at least through the first part of 2019. How- ever, damaging trade policies, labor shortages and rising interest rates pose growing challenges to contractors and their clients." Spending year-to-date through the first nine months of 2018 was 7.0 percent higher than in January through Sep- tember 2017 for public construction and 5.1 percent for private construc- tion, the economist commented. Within private construction, spending for res- idential projects increased 6.4 percent and 3.5 percent for nonresidential projects. Major segments continued year-to-date gains, Simonson observed. The largest public categories recorded year-to- date gains of 5.8 percent for highway construction, 2.0 percent for educa- tional construction and 15.8 percent for transportation construction. Of the three private residential spending categories, single-family homebuilding rose 6.4 percent year- to-date, multifamily was virtually unchanged and improvements to existing buildings climbed 7.1 percent. Among private nonresidential spend- ing segments, the largest – power construction (including oil and gas field and pipeline structures) – edged up 2.3 percent, commercial (retail, warehouse and farm) construction rose 4.8 per- cent, office construction increased 7.4 percent and manufacturing construc- tion declined 3.4 percent. Association officials said that overall economic conditions remain positive as the economy continues to benefit from recently enacted tax and regulatory reforms. But they warned that a grow- ing trade dispute with China, shortages of qualified workers and rising interest rates could undermine future demand for construction services. They urged federal officials to resolve trade dis- putes and boost investments in career and technical education programs. "Washington has taken a number of positive steps to deliver robust eco- nomic growth during the past two years," said Stephen E. Sandherr, the association's chief executive officer. "The best thing federal officials can do to maintain current rates of growth is to resolve potentially costly trade disputes and boost investments in workforce development." UNLOAD

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