Concrete Products

SEP 2017

Concrete Products covers the issues that attract producers of ready mixed and manufactured concrete focusing on equipment and material technology, market development and management topics.

Issue link: http://concrete.epubxp.com/i/872825

Contents of this Issue

Navigation

Page 18 of 59

www.concreteproducts.com September 2017 • 17 NEWS SCOPE MARKETS Analyzing construction spending levels from the first half of 2017, Associated General Contractors of America officials find significant declines in public-sector investment at a time when much of the nation's infrastructure is deteriorating due to age or overuse. "Construction spending is still increasing overall but growth has become much more uneven across categories in recent months," says AGC Chief Economist Ken Simonson. "There has been a steep decline in public investment in nearly all types of construction over the past year. Private nonresidential construction is still rising overall but generally at slower rates than was occurring a few months ago." Construction spending in June 2017 totaled $1.206 trillion at a seasonally adjusted annual rate, a drop of 1.3 percent from the down- wardly revised May total and up just 1.6 percent from a year earlier. Every public spending category recorded a decrease for the month and nearly all were lower than a year ago, while multifamily construction and several private nonresidential categories also declined or had smaller increases than previously. Public construction spending plunged 5.4 percent from the prior month and 9.5 percent from June 2016 to June 2017. The spending rate this June was the lowest seasonally adjusted rate since February 2014. The biggest public segment—highway and street construc- tion—slumped 8.1 percent from a year earlier. Among other major public infrastructure categories, spending on transportation facilities such as transit and airport construction dropped 3.9 percent year- over-year; spending on sewage and waste disposal plummeted 16.1 percent; and, spending on water supply fell 17.7 percent. Public spending on educational structures declined 7.3 percent from a year ago. Private nonresidential spending inched up 0.1 percent for the month and 1.1 percent over 12 months. The largest private nonresi- dential segment was power construction (including oil and gas field and pipeline projects), which dropped 5.4 percent from June 2016 to June 2017. The next-largest segment, commercial (retail, warehouse and farm) construction, climbed 13.8 percent year-over-year. Manu- facturing construction declined 7.7 percent for the year. Private office construction increased 12.6 percent since June 2016. Private residential construction spending slipped by 0.2 percent between May and June 2017 but gained 9.2 percent over the year. Spending on multifamily residential construction edged up 0.6 per- cent from a year ago, while single-family was up 9.0 percent from the June 2016 rate. AGC-REVISED 2017 OUTLOOK Dovetailing the Associated General Contractors analysis is the Q3 2017 Forecast Quarterly Report of ConstructConnect (iSqFt, Construction Market Data, BidClerk, Construction Data source), which trims pro- jected U.S. total construction starts growth for this year against 2016 from 4.8 percent to 4.5 percent, and the 2018 year-over-year gain from 6.0 percent to 5.9 percent. "The outlook for U.S. construction starts, as calculated by Con- structConnect, has diminished slightly in the short term," according to Chief Economist Alex Carrick. "Prospects for some private sector project initiations (e.g., in retail) have stalled, while high hopes for an early launch of a much-needed super-infrastructure program, to be sponsored, promoted and perhaps largely financed by the new administration in Washington, have been deflated." Combining proprietary ConstructConnect data with macroeco- nomic factors and Oxford Economics econometric expertise, the Q3 2017 Forecast shows the type of structure sub-categories among nonresidential building starts that will have banner years in 2017: Hotels/motels (+38.2 percent), Warehouses (+16.3 percent), Sports stadiums (+47.3 percent), and Courthouses (+110 percent). The 2017 forecast for nonresidential building starts was adjusted to -0.8 percent year-over-year versus the flat performance noted in the Q2 Forecast. According to the Q3 Forecast, nonresidential building starts in 2018 will rebound to +3.3 percent, with private office building and indus- trial/manufacturing sectors performing better owing to less drag from retail and medical project activity. Based on a heightened record of 'actual' starts through the first half of this year (+25.2 percent), projected heavy/civil project starts in 2017 were revised upwards to +16.5 percent from the +8.9 percent in the Q2 report. Projected growth in 2018 for the category has been raised to 7.4 percent from 5.8 percent. The forecast includes a few notable high points in 2017 year-over-year sub-categories: Airports (+38.0 percent), Roads (+14.0 percent), Bridges (+31.0 percent), and Power/oil and gas (+30.8 percent). The report states among major sub-sectors, residential construc- tion's 2017 year-over-year increase has been scaled down to +4.8 percent from +8.1 percent. The robust multi-family market of the last several years has been pulling back of late, as rental rates in many regions soared. Single-family unit starts also stalled, despite a need for substantial growth activity stemming from the sharp, pro- longed lag throughout the Great Recession. New family formations, specifically among millennials, point to a tremendous building market potential that for the moment is not being realized. Public construction spending drop compels full-year forecast revisions

Articles in this issue

Links on this page

Archives of this issue

view archives of Concrete Products - SEP 2017