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May Construction Gains 5 percent By Mark S. Kuhar At a seasonally adjusted annual rate of $495.7 billion, new construction starts in May advanced 5 percent from the previous month, according to McGraw Hill Construction, a division of McGraw Hill Financial. Much of the upward lift came from nonresidential building, which registered moderate growth for the second month in a row after its slug‐ gish performance at the outset of 2013. Smaller gains in May were reported for housing and nonbuilding construction (public works and electric utilities). Highway and bridge construction bounced back 11 percent. During the first five months of 2013, total construction starts on an unad‐ justed basis were reported at $187.6 billion, down 3 percent from the same period a year ago. The 2013 year‐to‐ date volume for total construction re‐ flected a steep decline in the dollar amount for new electric utility projects relative to a robust first half of 2012. If electric utilities are excluded, total con‐ struction starts would be up 10 percent year‐to‐date, helped in particular by the strengthened pace for housing. May's data raised the Dodge Index to 105 (2000=100), up from the 100 that was reported for April, and slightly above the average Index reading for all of 2012 at 101. "The construction industry has shown modest improvement over the past year, helped by some project types while restrained by others," stated Robert A. Murray, vice president of eco‐ nomic affairs for McGraw Hill Construc‐ tion. "The housing sector played a leading role last year in lifting overall construction activity, and while this year's month‐to‐month gains have been 38 ROCKproducts • JULY 2013 smaller, housing continues to lead the hesitant construction expansion. Non‐ residential building has yet to provide much of a contribution, as tenuous gains for commercial building have been offset by further weakness for in‐ stitutional building. Still, the April and May pickup for nonresidential building could be a sign of more growth to come. As for nonbuilding construction, the negative impact from the sequester has so far turned out to be less severe on the public works categories than antici‐ pated. However, new electric utility starts are in the midst of sharp decline from last year's record amount, and the extent of that decline is limiting what‐ ever gain may be possible this year for total construction." Nonresidential Building Nonresidential building in May grew 9 percent to $156.4 billion (annual rate), following its 6 percent rise in April. For the commercial categories, stores and shopping centers are gathering mo‐ mentum, with a 16 percent increase re‐ ported for May. Large retail projects that reached groundbreaking in May included a $60 million shopping center in Fresno, Calif., and the $52 million second phase of the City Point retail and residential complex in Brooklyn, N.Y. New hotel construction starts soared 94 percent in May, boosted by the $415 million SLS Las Vegas hotel complex on the site of the former Sa‐ hara Hotel and Casino. Office construction in May edged up 3 percent, following a substantial 58 per‐ cent jump in April. Large projects in May that helped to keep office construc‐ tion at its improved pace were the $250 million renovation of the International Monetary Fund Headquarters in Wash‐ ington, D.C., the $200 million renovation to the United Nations General Assembly Building in New York, a $120 million of‐ fice building in McLean, Va., and a $113 expansion to a data center in Dallas. Warehouse construction was the one commercial project type to retreat in May, sliding 7 percent, despite the start of a $100 million distribution facility in Edgerton, Kan. The nonresidential building total was helped in May by a considerable gain for manufacturing plants, which jumped 70 percent with the start of a $378 million technology development center in Malta, N.Y., and a $110 million expansion to a health‐ care products manufacturing plant in Athens, Ga. The institutional categories in May showed a mixed pattern. Educational fa‐ cilities rebounded 10 percent after a weak April, helped by such projects as the $250 million expansion of the San Francisco Museum of Modern Art, a $91 million high school in Flower Mound, Texas, and a $67 million high school ad‐ dition in Alexandria, Va. May included groundbreaking for 16 high school proj‐ ects each with a construction start cost of $10 million or more. The public buildings category in May climbed 95 percent from a very de‐ pressed April, supported by the start of a $125 million detention facility in Red‐ wood City, Calif. However, healthcare facilities fell back 10 percent in May, de‐ spite the start of a $175 million hospital tower in Orlando. Other declines were reported for amusement‐related proj‐ ects, down 17 percent; churches, down 27 percent; and transportation termi‐ nals, down 33 percent. The decline for transportation termi‐ nals came relative to a very strong www.rockproducts.com