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Reports Chronicle Pickup in Private Nonresidential Building; cement shortage spreads

Vol. 4, No.45 November 9-12, 2004
The Data DIGest
Ken Simonson, Cheif Economist, Associated General Contractors of America
Phone: 703-837-5313 Fax: 703-837-5407
simonsonk@agc.org

Retail and food services sales rose 0.2% from September to October, seasonally adjusted, following a 1.6% jump the previous month, the Census Bureau reported today. Growth appears much less volatile if motor vehicle and parts sales are excluded: 0.9% in October, 0.8% in September. The data include price increases, which explain why gas stations have the largest percentage gain of any category in October, 4.3%. Overall year-to-date sales (comparing the first 10 months of 2004 to the same period of 2003) were up 7.6%. The largest year-to-date gains were logged by gas stations (15%), building materials and garden equipment and supplies dealers (14%), and nonstore retailers such as mail-order and Internet sellers (12%). Incomplete data for warehouse clubs and superstores suggest a growth rate of about 14%. Laggards included department stores (0% excluding leased departments), sporting goods, hobby, book, and music stores (3%), and food and beverage stores (4%). These figures imply retail construction is likely to expand more for large stand-alone stores than at malls and grocery stores. Today's Wall Street Journal reported that Kohl's Corp. plans to open about 95 stores next fiscal year, which begins in February.

Inventories of manufacturers, merchant wholesalers, and retailers rose 0.1% in September, seasonally adjusted, after rising 0.7% in August, Census reported today. Inventories have risen 7% since September 2003, which may stimulate additional warehouse and distribution construction. On Tuesday the Atlanta Business Chronicle reported that FedEx Ground will build a 247,000-square-foot automated distribution facility in Kennesaw, Georgia, to replace and triple the capacity of its current terminal in Marietta. FedEx is in the midst of a "$1.8 billion network expansion plan, which includes the construction of nine new hubs, the expansion of 30 existing hubs, and the relocation of nearly 290 pickup and delivery terminals….Four new hubs currently under construction in the metro areas of Cincinnati, Dallas, Memphis, and Hagerstown, Maryland, are scheduled to open in 2005 and 2006."

Factory construction also appears to be picking up. Tuesday's Chronicle reported as well, "Honda Motor Co. plans to build a $100 million plant 40 miles west of Atlanta…in Tallapoosa, a new 250,000-square-foot plant that will begin assembly of automatic transmissions in fall 2006….Honda also plans to add production of high precision gears at a Honda transmission plant in Ohio, and key engine components at a Honda engine facility in Alabama." Several weeks ago, Toyota Motor Corp. announced it would spend $250 million to nearly double the size of its Huntsville, Alabama, engine plant, the Wall Street Journal reported. Wednesday's Journal reported, "Dell Inc. plans to construct a new 500,000-square-foot personal-computer assemply plant in [the Triad area of] North Carolina….Dell has recently announced other new U.S. facilities totaling one million square feet. It plans to open a customer call center in Oklahoma and a software and peripherals distribution facility in Ohio." Wednesday's Washington Business Journal reported that Dreyer's Grand Ice Cream Holdings "plans to invest $180 million [to triple capacity at its Laurel, Maryland ice cream] manufacturing facility and add a new state-of-the-art warehouse….In May it began a $100 million expansion of an ice cream manufacturing facility in Bakersfield, California."

Construction of mixed-use developments of various types seems to be heating up in selected markets. Monday's Seattle Times reported, "In Seattle and Bellevue, new office, retail, medical, and condominium projects are either planned or under construction, revitalizing a building industry that just a year ago was hunkered down for a long, slow spell….one area in particular has stood out in recent months: developments that combine housing with commercial uses. Business has tripled in the past year for Compass Construction Management, which specializes in mixed-use residential building." Wednesday's Wall Street Journal reported, "Two giant development projects, each of them conceived as a minicity with homes, shopping, and gambling, are set to change the face of Las Vegas by the end of the decade. MGM Mirage is planning to announce today that it will build a $4 billion 'city' on the Las Vegas Strip….At the same time, casino impresario Steve Wynn is planning to build a huge resort development….According to the plans, described by several people familiar with them, the project would entail as many as a dozen resort hotels surrounding a vast lake that would be built behind the copper-colored Wynn Las Vegas tower that is now rising."

The Portland Cement Assn., in a new Cement & Construction Forecast, reported, "Tight cement supply conditions now prevail in portions of 35 states. Since PCA's last survey, Texas, Arkansas, Missouri, Indiana, Ohio, Pennsylvania, New Jersey, Delaware, Vermont, New Hampshire, Arizona, New Mexico and Utah have been added. Nebraska has been removed….It should be kept in mind that not all portions of each state are characterized by tight supplies. Northern Ohio and Indiana, for example, reportedly have ample supplies."

> The Data DIGest is a weekly summary of economic news; items most relevant to construction are in italics. All rights reserved.


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