Rock Products

OCT 2012

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August Construction Advances 8 Percent By Mark S. Kuhar At a seasonally adjusted annual rate of $433.9 billion, new construction starts in August climbed 8 percent compared to July, as reported by Mc‐ Graw‐Hill Construction, a division of The McGraw‐Hill Companies. After declines in the previous three months, the August pickup was the result of greater activity for each of construction's three main groups – nonresidential building, residential building and nonbuilding construc‐ tion. During the first eight months of 2012, total construction starts on an unadjusted basis came in at $304.5 billion, up 3 percent from the same period a year ago. The August statistics raised the Dodge Index to 92 (2000=100), up from July's 85. After reaching 114 in April, which was lifted by the start of a massive nuclear power plant in South Carolina, the Dodge Index then retreated through July. With its Au‐ gust rebound, the Dodge Index has returned to the average level that was reported for all of 2011. "The pattern of construction starts continues to exhibit an up‐and‐down pattern, with the end result being that overall construction activity has yet to show much in the way of sus‐ tained growth," stated Robert A. Mur‐ ray, vice president of economic affairs for McGraw‐Hill Construction. "Gains for some project types con‐ tinue to be offset by declines for other project types. So far in 2012, housing has been one of the brighter areas for construction – multifamily housing is strengthening, and single family housing is finally registering steady growth, although in a very gradual manner. The commercial 38 ROCKproducts • OCTOBER 2012 project types have shown hesitant upward movement, while this year's earlier weakness for the institutional sector seems to be easing a bit. Elec‐ tric utility construction is seeing an‐ other year of exceptionally strong activity, but the public works sector continues to deal with spending limi‐ tations. If overall construction activ‐ ity is to establish a more solid upward trend, the degree of uncer‐ tainty surrounding the U.S. economy needs to recede, which may prove difficult to achieve in the near term given the impending 'fiscal cliff' at the end of 2012." Nonresidential Nonresidential building in August grew 7 percent to $147.7 billion (an‐ nual rate). Much of the boost in Au‐ gust came from the institutional categories, in contrast to this sector's generally weak performance during most of 2012. Educational facilities in August increased 17 percent. Several university‐related projects also con‐ tributed to the August gain for educa‐ tional facilities. The transportation terminal category in August jumped 111 percent, reflect‐ ing $325 million for work on a sub‐ way station in New York and a $200 million expansion to the JetBlue ter‐ minal at New York's JFK International Airport. The amusement category in August climbed 23 percent, while church construction grew 11 percent from a depressed July. Institutional categories that retreated in August were healthcare facilities and public buildings, as each dropped 11 percent. Several commercial categories in Au‐ gust lost momentum, slipping back after the improvement shown earlier this year. Store construction in Au‐ gust fell 10 percent from July, while warehouse construction decreased a more substantial 29 percent. At the same time, both stores and ware‐ houses were able to hold onto year‐ to‐date gains compared to last year, rising 10 percent and 3 percent, re‐ spectively. Office construction in Au‐ gust retreated 5 percent. Showing slight growth in August was hotel construction, which edged up 2 per‐ cent. Manufacturing plant construc‐ tion in August also posted a slight gain, increasing 1 percent. Residential Residential building, at $168.9 billion (annual rate), climbed 9 percent in August. Multifamily housing bounced back 35 percent after pausing in July, matching its strong June pace. Through the first eight months of 2012, the most active metropolitan areas in terms of the dollar volume of new multifamily starts were: New York, Washington, D.C., Los Angeles, Miami and Boston. Single family housing in August grew 3 percent, and has shown small yet steady gains during the first eight months of 2012, such that the amount in August was 22 percent higher than at the end of last year. The August gain for single family housing included increases for four major regions – the Midwest, up 5 percent; the West, up 4 percent; the South Central, up 2 percent; and the South Atlantic, up 1 percent; while the Northeast settled back 2 percent. Nonbuilding Nonbuilding construction in August increased 8 percent to $117.3 billion (annual rate). After the steep de‐ www.rockproducts.com

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