Rock Products

JAN 2019

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36 • ROCK products • January 2019 www.rockproducts.com "During 2018, the presence of very large projects in a given month has played a considerable role in shaping the monthly pattern of activity, and in October it was nonresidential build- ing that especially benefitted from the start of very large projects," stated Robert A. Murray, chief economist for Dodge Data & Analytics. "These included a $2.4 billion petrochem- ical plant in Texas, the $1.4 billion Terminal One building at Newark Liberty International Airport, the $860 million expansion to the Las Vegas Convention Center, a $750 million Facebook data center in Utah and a $655 million concourse expansion at Denver International Airport that's part of that facility's extensive upgrade. Earlier, decreasing construction starts for nonresidential building during this year's third quarter raised some concern, suggesting that this sector may have already peaked and is now in decline. The strong October performance indicates that nonresidential building construction starts continue to proceed at an elevated pace, at least for the present." Murray continued, "The current year has also witnessed moderate growth for public works construction, helped by the greater federal funding for fiscal 2018 passed by Con- gress back in March as part of the omnibus appropriations legislation. For fiscal 2019, which began on October 1, the federal-aid highway program and EPA construction-re- lated programs are operating under a continuing resolution through December 7, waiting for Congress to finalize spend- ing levels. As for residential building, multifamily housing has shown renewed expansion this year after settling back in 2017, yet a more cautious lending stance by banks towards multifamily development may dampen multifamily construc - tion starts next year." Nonbuilding construction in October 2018 was $184.0 bil- lion (annual rate), up 14 percent following September's 13 percent decline. The electric utility/gas plant category increased 187 percent relative to a very weak September, although October's volume was still 32 percent less than the average monthly pace reported during 2017. Large electric utility projects that reached groundbreaking in October were a $334 million wind farm in Kansas and a $300 million wind farm in Minnesota. The public works categories as a group rose 6 percent in October 2018, with a varied performance by individual cat- egory. Highway and bridge construction starts climbed 26 percent, with October 2018 coming in as the highest season- ally adjusted monthly amount so far for 2018. Large highway and bridge projects in October 2018 were led by the $1.3 billion U.S. portion of the Gordie Howe Inter- national Bridge (estimated at $2.6 billion in U.S. dollars for the entire bridge), connecting Detroit and Windsor, Ontario. Other large highway and bridge projects in October 2018 were the $802 million I-395 project in Miami and the $673 million I-10 Corridor project in San Bernardino, Calif. The top five states ranked by the dollar amount of highway and bridge construction starts in October were – Texas, Mich- igan, Florida, California and Pennsylvania. River/harbor development in October 2018 advanced 114 percent, reflecting a $210 million harbor dredging project in Jacksonville, Fla. Water supply construction grew 30 percent in October, boosted by a $121 million water supply conduit project in Burbank, Calif. The miscellaneous public works category pulled back 33 percent in October from its heightened September pace, which included the $1.4 billion Arbuckle II natural gas pipeline in Texas and Oklahoma, as well as the $1.1 billion Cactus II oil pipeline in Texas. The October data did include the start of one major pipe- line project – the $2.0 billion Gray Oak oil pipeline that will transport crude oil from the Permian Basin to the Corpus Christi, Texas, area. Through the first 10 months of 2018, pipeline construc- tion starts totaled $19.3 billion, down only 8 percent from the robust amount during the same period of 2017. Sewer construction also retreated in October, falling 40 percent. Momentum Going Forward The Dodge Momentum Index moved 5.3 percent higher in November to 159.7 (2000=100) from the revised Octo- ber reading of 151.7. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. November's gain was due to a 9.4 percent rebound for the commercial component of the Momentum Index. The recent setbacks in the overall Momentum Index were the result of declines in planning for commercial buildings, and while such planning did rebound in November, the level remains below what was reported in late spring and early summer. This is consistent with the view that the commercial building sector may now be nearing a peak. Meanwhile, the institutional component of the Momen- tum Index eased back 0.6 percent in November. Plans for institutional building projects have remained generally stable during 2018, reflecting the influence of public funding as it relates to such projects as schools and trans- portation terminals. In November, 13 projects each with a value of $100 million or more entered planning. The two leading commercial projects were a $350 million hotel in Indianapolis and a $300 million office building in Chicago. The two leading institutional projects were a $320 million high school in Chino, Calif., and a $240 million research laboratory in Long Island City, N.Y. Outlook/Forecast 2019

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