Rock Products

MAY 2019

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www.rockproducts.com ROCK products • May 2019 • 57 At a seasonally adjusted annual rate of $697.4 billion, new construction starts in February dropped 3% from the previous month, according to Dodge Data & Analytics. The February decline returned construction starts to the downward path that emerged during the closing months of 2018. Two of the three main construction sectors registered weaker activity in February – nonbuilding construction fell 8%, due to a pullback by its public works segment, while residential building slipped 3%. Meanwhile, non- residential building in February was able to hold steady with its January pace. Highway and bridge construction fell 7%. "The pace of construction starts has been lackluster in early 2019," stated Robert A. Murray, chief economist for Dodge Data & Analytics. "The public works sector has retreated, likely affected by harsh winter weather condi- tions and the fact that fiscal 2019 federal appropriations for several programs were not finalized until mid-February. With funding levels now set, including a 2% increase for the federal-aid highway program, it's expected that public works will show improvement in coming months. For residential building, sin- gle-family housing remains sluggish, as affordability constraints continue to dampen demand even as mortgage rates have settled back, while a more cautious lending stance by banks may now be starting to restrain multifamily development. Nonresidential building so far in 2019 has not yet seen the same magnitude of very large projects that reached groundbreaking during 2018." Nonbuilding Construction Nonbuilding construction in February was $153.6 billion (annual rate), down 8% from January. The public works categories as a group dropped 15%, retreating for the second month in a row, while the electric utility/gas plant category climbed 34%. Highway and bridge construction fell 7% after a 2% decline in January, and February's activity was down 12% from the average monthly pace during 2018. Large highway projects that reached groundbreaking in February were a $185 million highway expansion in Phoenix and a $178 million highway expansion in San Antonio. The miscellaneous public works cat- egory, which includes such diverse project types as pipelines and rail tran- sit projects, plunged 49% in February after soaring 114% over the previous two months, with January lifted by the start of the $1.0 billion Midship natural gas pipeline in Oklahoma. By contrast, the largest miscellaneous public works project entered as a February construc- tion start was a $127 million natural gas pipeline in New Jersey. Sewer construction in February retreated 8%, despite the start of a $267 million waste water treatment plant expansion in the Honolulu area. The remaining two public works proj- ect types registered gains in February, with river/harbor development, up 25%; and water supply construction, up 11%. The 34% jump for the electric utility/gas plant category in February reflected the start of two large natural gas-fired power plants, a $1.0 billion plant in Saint Clair, Mich., and a $937 million plant in Willis, Texas, plus the start of a $375 million solar power plant in the Valdosta, Ga., area. Residential Building Residential building in February was $299.3 billion (annual rate), down 3% as both sides of the housing market showed decreased activity. Multifamily housing fell 7%, retreating after its 17% rebound in January. Despite the decline, there were still six multifamily projects valued at $100 million of more that reached groundbreaking in February. The next largest multifamily projects were the $154 million multifamily por- tion of the $170 million Archer Green mixed-use complex in the Jamaica Queens area of New York and the $144 million multifamily portion of the $240 million Hoffman Town Center project (blocks 4 and 5) in Alexandria, Va. ECONOMICS MONTHLY CONSTRUCTION STARTS (Seasonally Adjusted Annual Rates, In Millions of Dollars) Feb. 2019 Jan. 2019 % Change Nonresidential Building $244,481 $244,744 -0- Residential Building $299,350 $310,122 -3 Nonbuilding Construction $153,583 $167,430 -81 TOTAL Construction $697,414 $722,296 -3 February Construction Starts Dip 3% Two of the Three Main Construction Sectors Registered Weaker Activity in February. By Mark S. Kuhar

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