Issue link: https://read.dmtmag.com/i/401422
WORLD FENCE NEWS • NOVEMBER 2014 • 55 NEW YORK – At a seasonally adjusted annual rate of $540.6 billion, new construction starts in August dropped 9%, according to McGraw Hill Construction, a division of Mc- Graw Hill Financial. The decline followed July's ele- vated volume, the strongest so far in 2014, and brought activity back to the average pace reported during the first seven months of this year. By major sector, nonresidential building fell sharply, after being lift- ed in July by the start of several large manufacturing plant projects, while nonbuilding construction (public works and electric utilities) also re- treated. Residential building in August ran counter by posting a modest gain, helped by the continued growth for multifamily housing. Through the first eight months of 2014, total con- struction starts on an unadjusted basis were $361.4 bil- lion, up 4% from the same period a year ago. The August statistics lowered the Dodge Index to 114 (2000 =100), compared to a revised 126 for July. "The broad trend for construc- tion activity remains upward, but on a month-to-month basis there are still the occasional setbacks," stated Rob- ert A. Murray, chief economist for McGraw Hill Construction. "Non- residential building over the past two months was boosted by the start of several unusually large energy-related manufacturing projects, so the pull- back in August was not unexpected. "The commercial side of nonresi- dential building continues to see mod- erate growth, and there's now further evidence that the institutional struc- ture types have at least stabilized after a lengthy five-year decline," he stated. "While public works construction is now settling back, the August pas- sage of the $10.8 billion patch to the Highway Trust Fund should help to keep the slide from getting too severe. "Residential building continues to be supported by the ongoing strength shown by multifamily housing. How- ever, this year's pause for single fam- ily housing has emerged as an area of concern, limiting the growth that's being reported for total construction activity." Nonresidential building in August plunged 19% to $184.9 billion (annual rate), after the strong gains that raised activity for this sector 20% over the past two months. The manufacturing plant category in August dropped 81% from a July that had included the start of a $3.0 billion petrochemical plant and a $1.7 billion ethylene plant, both located in Texas, among other large manufacturing plant starts. August did include groundbreak- ing for a $500 million polyethylene plant expansion in Texas and a $130 million fabric manufacturing plant in Louisiana – substantial projects by themselves, but smaller in magnitude and number than the large projects en- tered as construction starts in July. If the man- ufacturing plant category is exclud- ed, nonresidential building in Au- gust would have posted a 9% gain. The commercial building categories overall in August advanced 6%. Store construction led the way by jumping 27%, aided by the $157 million retail portion of the $957 million Nordstrom Tower, a massive residential/retail/hotel mixed use high-rise that reached groundbreak- ing in New York, N.Y. Warehouse construction in Au- gust grew 8%, maintaining the im- provement that's been shown after a weak first quarter. Office construction edged up 2%, helped by the August start of such projects as a $375 million office build- ing in Milwaukee, a $175 million of- fice tower in Bellevue, Wash., and a $117 million corporate headquarters in Portland, Ore. Hotel construction retreated 10% after a strong gain in July, although August did include the start of such projects as a $200 million hotel in Washington, D.C. and the $82 million hotel portion of the Nordstrom Tower in New York, N.Y. The institutional building group in August climbed 12%. Healthcare facilities surged 76% after a weak July, lifted by the start of two large projects in New York, N.Y. – an $800 million clinical medical fa- cility and an $800 million ambulatory care center. While the healthcare facilities category has been generally lackluster The Dodge Report Broad trend for construction remains upward, but month-to-month setbacks to be anticipated continued on page 66 "While public works construction is now settling back, the August passage of the $10.8 billion patch to the Highway Trust Fund should help to keep the slide from getting too severe." – Robert A. Murray Booth No. 703