Rock Products

JUN 2018

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64 • ROCK products • June 2018 New construction starts in March increased 11 percent from the previous month to a seasonally adjusted annual rate of $785.2 billion, according to Dodge Data & Analytics. The substan- tial gain followed modest declines in January (down 2 percent) and Febru- ary (down 3 percent), and brings the pace of total construction starts to the highest level over the past six months. Highway and bridge construction climbed 29 percent. The nonbuilding construction sector soared 73 percent in March, boosted by the start of several large projects. These included the $3.5 billion Moun- tain Valley Pipeline expansion in West Virginia and Virginia, the $1.1 bil- lion I-405 highway project in Orange County, Calif., the $855 million Grand Parkway highway project in Houston and a $400 million wind farm in Kansas. At the same time, both nonresidential building and residential building eased back slightly in March, with respective declines of 1 percent and 2 percent. "The construction start statistics can show wide swings month-to-month, and March certainly qualifies as one of the stronger months due to the inclusion of several very large projects," stated Robert A. Murray, chief economist for Dodge Data & Analytics. "Looking at the data on a quarterly basis can reduce the volatility present in the monthly statis- tics, and this year's first quarter shows a continuation of the up-and-down pat- tern that's been present over the past year – first quarter 2017 up 10 percent, second quarter 2017 down 6 percent, third quarter 2017 up 8 percent, fourth quarter 2017 down 9 percent, and now first quarter 2018 up 2 percent. This up-and-down pattern typically occurs when construction is at a mature stage of expansion, characterized by a slower rate of growth. A decelerating expan- sion does not necessarily mean that decline will closely follow, and there are several factors during 2018 that will help construction to stay close to recent levels. In March, Congress reached agreement on fiscal 2018 federal appropriations, which provide additional funding for several public works programs, especially those that are transportation-related. Greater funding continues to be present from construction bond measures passed by state and local governments in recent years. The overall economy continues to proceed at a healthy clip, which sup- ports healthy market fundamentals for commercial building. And, while inter- est rates are rising, the increases so far have been moderate, as shown by the 10-year Treasury bill stabilizing at 2.8 percent to 2.9 percent during March and the first half of April." Nonbuilding Construction Nonbuilding construction was $205.7 billion (annual rate), up 73 percent from February. The substantial per- centage gain was the result of a strong March (the third highest monthly amount over the past year) being com- pared to a weak February (the lowest monthly amount over the past year). The public works categories as a group climbed 62 percent in March, led by a 198 percent jump for the miscellaneous public works category that includes pipeline projects. Highway and bridge construction climbed 29 percent in March, boosted by the start of the $1.1 billion I-405 highway project in Orange County, Calif., the $855 million Grand Parkway high- way project in Houston and the $318 million Kosciuszko Bridge replacement project (phase 2) in Brooklyn, N.Y. The river/harbor development cat- egory jumped 77 percent in March, aided by the start of a $580 million storm sewer and utility tunnel project in Washington, D.C., and a $122 million harbor-dredging project in Boston. Sewer construction in March was unchanged from February, while water supply construction fell 4 percent. The electric utility/gas plant category increased 507 percent in March, due to the comparison to an extremely low amount in February. The rate of construction starts in March was still 47 percent below its average monthly pace during 2017. Large electric util- ity/gas plant projects in March were a $400 million wind farm in Kansas, a $125 million liquefied natural gas plant in Texas, and two solar power facilities in Hawaii valued respectively at $125 million and $115 million. ECONOMICS MONTHLY CONSTRUCTION STARTS (Seasonally Adjusted Annual Rates, In Millions of Dollars) March 2018 Feb. 2018 % Change Nonresidential Building $243,293 $246,059 -1 Residential Building $336,240 $343,409 -2 Nonbuilding Construction $205,703 $119,208 +73 TOTAL Construction $785,236 $708,676 +11 Source: U.S. Dept. of Commerce March Construction Starts Advance 11 Percent Nonresidential Building Skyrockets 73 Percent; Highway and Bridge Construction Up 29 Percent. By Mark S. Kuhar

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