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60 • JANUARY 2014 • WORLD FENCE NEWS NEW YORK, N.Y. – The value of new construction starts increased 5% in October to a seasonally adjusted annual rate of $585.6 billion, according to McGraw Hill Construction, a division of McGraw Hill Financial. The gain followed a 13% jump for total construction starts in September, and during both September and October much of the upward push came from groundbreaking for several very large projects. By sector, nonresidential building surged in October, aided by the start of three massive manufacturing plants, and residential building resumed its upward track after a September pause. Although nonbuilding construction in October settled back from its elevated September pace, the decline was cushioned by the start of structural work valued at $2.8 billion on the Tappan Zee Bridge replacement project in New York. The October data lifted the Dodge The Dodge Report October construction advances 5 percent Index to 124 (2000=100), compared to 118 in September and the highest reading for the Index so far in 2013. During the first eight months of 2013, the Index had stayed within the fairly narrow range of 99 to 107, but the most recent two months have seen the Index climb substantially. "The levels of activity in September and October reflected the impact of several large and unusual projects, so a slower pace can be expected going forward in the near term," said Robert A. Murray, chief economist for McGraw Hill Construction. "At the same time, October's data did include positive signs that the underlying upward trend for construction is likely to continue, even amidst the greater uncertainty caused by the 16day government shutdown. MONTHLY SUMMARY OF CONSTRUCTION STARTS Prepared by McGraw-Hill Construction Research & Analytics MONTHLY CONSTRUCTION STARTS Seasonally Adjusted Annual Rates, in Millions of Dollars October 2013 Nonresidential building Residential building Nonbuilding construction Total construction September 2013 Percent Change $ 216,905 209,494 159,204 $ 585,603 $ 181,430 204,255 170,098 $ 555,783 + 20 + 3 – 6 + 5 THE DODGE INDEX (Year 2000 = 100, Seasonally Adjusted) October 2013 ..................................................... 124 September 2013 ................................................. 118 YEAR-TO-DATE CONSTRUCTION STARTS Unadjusted Totals, in Millions of Dollars 10 Mos. 2013 Nonresidential building Residential building Nonbuilding construction Total construction $ 140,217 173,605 119,163 $ 432,985 10 Mos. 2012 $ 132,456 138,310 143,615 $ 414,381 Percent Change + + – + 6 26 17 4 "For nonresidential building, more manufacturing-related projects are reaching groundbreaking, the commercial structure types are moving upward, albeit unevenly, and the educational building category is providing more evidence that it's stabilizing after a lengthy decline," he said. "Residential building in October showed its resilience with a modest gain after losing momentum in September. And, while public works is vulnerable to federal spending cutbacks, it continues to benefit as major projects that have been in the planning pipeline are now reaching the construction start stage." Nonresidential building in October climbed 20% to $216.9 billion (annual rate). Manufacturing plant construction soared 147%, led by the start of these three projects – a $1.7 billion fertilizer plant in Iowa, a $1.7 billion natural gas processing plant in West Virginia, and a $1.5 billion gasification plant in Louisiana that will produce industrial liquid and gas products from petroleum coke. New plant construction in Louisiana has been particularly strong through the first ten months of 2013, up 265% compared to last year, with Louisiana ranked first among the fifty states in the dollar volume of manufacturing starts. The commercial categories combined rose 3% in October, helped in particular by strong percentage growth for stores, up 29%; and warehouses, up 22%. The store category in October was supported by a $120 million expansion to an outlet mall at the Foxwoods casino complex in Ledyard, Conn., while warehouses benefitted from the start of a $50 million warehouse park in Edison, N.J. Offices and hotels retreated in October, falling 8% and 15% respectively. Despite its October decline, office construction did include the start of several noteworthy projects, such as a $150 million office building in San Francisco, a $115 million office tower in Boston, and an $83 million corporate headquarters building in San Diego. "The levels of activity in September and October reflected the impact of several large and unusual projects, so a slower pace can be expected going forward in the near term." – Robert A. Murray On the institutional side, the educational building category grew 4% in October, rising for the second month in a row and reaching its strongest volume so far in 2013. There were four large high school projects valued at $75 million or greater that reached groundbreaking in October, with two in Connecticut ($94 million and $75 million), one in Texas ($92 million), and one in Maryland ($86 million). Through the first ten months of 2013, the dollar amount for the educational building category was still down 1% from the prior year, but the shortfall has been narrowing as 2013 has progressed. The healthcare facilities category in October dropped 20% after its sharp upturn in September, although October did include the start of several large hospital projects – a $550 million hospital in Chicago, a $230 million hospital in Reading, Penn., and a $130 million hospital in Bangor, Me. Like educational buildings, the dollar amount for healthcare facilities continued on page 62