Rock Products

OCT 2016

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48 • ROCK products • October 2016 New construction starts in August soared 21 percent to a seasonally adjusted annual rate of $711.2 billion, according to Dodge Data & Analytics, following lackluster activity in July. The August rise for total construction starts featured an especially elevated amount for nonresidential building, which was helped by the start of a $3 billion pet- rochemical plant in Louisiana, the $1.7 billion Wynn Casino in the Boston area, and a $508 million terminal upgrade at Seattle-Tacoma International Airport. Highway and bridge construction in August rose 5 percent. The nonbuilding construction sector also experienced strong growth, with its public works segment lifted by the start of a $3 billion natural gas pipeline project in the states of Alabama, Geor- gia and Florida. In addition, residential building contributed with a moderate August gain, reflecting another advance for multifamily housing, which included groundbreaking for the $900 million Wanda Vista Tower in Chicago. "The sharp rise in August makes it likely when September data becomes avail- able that construction starts for the third quarter will be able to register moderate growth, supporting the belief that the construction industry still has room for further expansion despite some recent deceleration" stated Robert A. Murray, chief economist for Dodge Data & Analytics. "The presence or absence of very large projects, of course, has played a con- siderable role in the month-to-month pattern for construction starts," Murray continued. "While July did not receive much of a boost from very large proj- ects, such a boost was clearly present in the August statistics. Furthermore, the year-to-date readings for the first half of 2016 were skewed by the compari- son to the heightened first half of 2015, which included 13 projects valued at $1 billion or more, such as a $9 bil- lion liquefied natural gas terminal in Texas, the $2.5 billion 30 Hudson Yards office-retail tower in New York, and the $2.3 billion Interstate 4 highway proj- ect in the Orlando area. The number of $1 billion-plus projects entered as construction starts decreased substan- tially in the second half of 2015, when only three such projects were reported, and another low amount took place in this year's first half when only four such projects were reported. In August, three projects valued each in excess of $1 bil- lion were entered as construction starts, along with four projects in the $500 million to $1 billion range. This 'group- ing' of very large projects in August can be attributed to timing issues specific to each project, yet it may also be part of a more general trend reflecting a less hesitant stance by firms towards invest- ment than what was present over the past twelve months." Nonresidential Building Nonresidential building in August surged 42 percent to $267.4 billion (annual rate), rising from the subdued activity reported during the previous four months and reaching the highest amount since April 2015. A substantial boost came from the manufacturing plant category, which climbed 291 per- cent in August with the start of a $3.0 billion ethane cracker chemical plant in Lake Charles, La. If this petrochem- ical plant is excluded from the August data, the manufacturing plant category would have retreated 44 percent, but nonresidential building would still have been able to register a 23 percent gain. The commercial categories together advanced 31 percent, supported in particular by the August groundbreak- ing for the $1.7 billion Wynn Casino in Everett, Mass. Hotel construction climbed 71 percent, reflecting the $465 million estimated for the hotel portion of the Wynn Casino, with additional support coming from other notewor- thy projects such as the $180 million Lane Field Intercontinental Hotel in San Diego, Calif., and the $127 million CityCenterDC Conrad Hotel in Wash- ington, D.C. The commercial garage category advanced 64 percent, helped by the $210 million estimated for the garage portion of the Wynn Casino, as well as by a $128 million parking facility at San Diego International Airport. Warehouse Economics MONTHLY CONSTRUCTION STARTS (Seasonally Adjusted Annual Rates, In Millions of Dollars) Aug 2016 July 2016 % Change NonresidenƟal Building $267,419 $187,693 +42 ResidenƟal Building $291,090 $276,184 +5 Nonbuilding ConstrucƟon $152,705 $121.713 +25 TOTAL ConstrucƟon $711,214 $585,590 +21 New Construction Starts Make Huge Jump The August Rise For Total Construction Starts Featured An Especially Elevated Amount For Nonresidential Building. By Mark S. Kuhar

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