Rock Products

JUN 2019

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www.rockproducts.com ROCKproducts • June 2019 • 59 New construction starts in March advanced 16% from the previous month to a seasonally adjusted annual rate of $809.2 billion, according to Dodge Data & Analytics. The substantial gain fol- lowed a lackluster performance during the first two months of 2019, as total construction starts in March were able to climb back to a level slightly above the average monthly pace during 2018. Highway and bridge construction starts in March grew 4%. The nonbuilding construction sector, comprised of public works and elec- tric utilities/gas plants, jumped 40% in March from a weak February, lifted by the start of a $4.3 billion liquefied natural gas (LNG) export terminal in Cameron La. Nonresidential building increased 24% in March, aided by the groundbreak- ing for several large projects. These included the $1.6 billion Toyota-Mazda automotive manufacturing facility in Huntsville, Ala., a $1.1 billion hotel and theater redevelopment in New York, and the $850 million renovation of the KeyArena in Seattle. In contrast, resi- dential building slipped 3% in March, as multifamily housing retreated for the second consecutive month. "The month-to-month pattern for con- struction starts is often affected by the presence or absence of very large projects, and March certainly benefit- ted from groundbreaking for a number of very large projects," stated Robert A. Murray, chief economist for Dodge Data & Analytics. "It remains true that the construction expansion is deceler- ating, but the March upturn indicates that the loss of momentum won't be as pronounced as suggested by the sub- dued activity in January and February. It's still expected that the overall dollar amount for construction starts for 2019 will be able to stay close to what was reported for 2018. On the plus side, the passage of federal appropriations for fiscal year 2019 in mid-February seems to be helping the public works sector. The electric utility and gas plant category has shown surprising strength during early 2019, following the steep declines over the previous three years. The commercial building segment is supported by market fundamentals that have yet to erode, while the institutional building segment continues to move at a good clip. The areas of concern in the near term relate to residential build- ing, with single family housing not able to strengthen due to affordability constraints, while multifamily housing seems to be pulling back from its strong 2018 pace." Nonbuilding Construction Nonbuilding construction in March increased 40% to $214.7 billion (annual rate), following four straight months of decline that saw activity drop a combined 19%. The electric utility and gas plant category soared 116%, led by the inclusion of the $4.3 billion Calcasieu Pass LNG export ter- minal project in Cameron, La., as a March construction start. Gas plant-related construction starts (primarily LNG export terminals) had reached a peak back in 2015 at $26.2 billion, but then plunged to only $0.6 billion by 2017 before rebounding to $5.1 billion in 2018. The Calcasieu Pass LNG export terminal project should contribute to another increase for gas plant-related construction starts in 2019. If this massive project is excluded from the March statistics, the electric power and gas plant category would have fallen 76% from February, but gains would still have been shown by nonbuilding construction, up 7%; and total construction, up 9%. The public works categories as a group climbed 21% in March, rebounding after a 14% slide in February. Miscel- laneous public works (which includes such diverse project types as site work, pipelines and rail transit) jumped 84% after a weak February, led by such proj- ects as a $312 million segment of the border wall in south Texas and a $283 million upgrade to a train control signal system in Brooklyn, N.Y. Highway and bridge construction starts in March grew 4%, showing improve- ment after declines in January (down 5%) and February (down 6%). The top five states for highway and bridge construction starts in March, ranked by dollar volume, were Texas, Califor- nia, Pennsylvania, Florida and North Carolina. The environmental public works cat- egories showed a varied performance in March, with gains for dams/river ECONOMICS MONTHLY CONSTRUCTION STARTS (Seasonally Adjusted Annual Rates, In Millions of Dollars) March 2019 Feb. 2019 % Change Nonresidential Building $303,263 $245,551 +24 Residential Building $291,234 $298,758 -3 Nonbuilding Construction $214,654 $153,437 +40 TOTAL Construction $809,151 $697,746 +16 March Construction Starts Surge 16% Nonbuilding Construction Jumped 40%; Highway and Bridge Construction Grew 4%. By Mark S. Kuhar

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