FMI’s forecast for total construction put in place in 2012 is a 5% increase compared to 2011, or $826.3 billion. The last time construction put in place was at this level was 2000-2001.
Economic Indicators:
Despite slow growth projections and rising gasoline prices, the GDP is still growing and consumers are still spending, reflected in the Conference Board’s Consumer Confidence Index increasing to 70.8 in February compared to 70.4 a year ago. Along with the Federal Reserve’s intervention, these factors have served to keep growth slow and inflation in check, according to FMI.
Residential Construction:
In order for residential construction to achieve the 8% increase projected and top $264.4 billion in 2012, a number of factors still have to fall into place, according to FMI:
* Reduction in the current inventory of homes
* Lenders willing to lend on reasonable terms
* Steady improvement in hiring
Nonresidential Construction:
Projections indicate a 4% increase in nonresidential buildings for 2012, topping $341 billion, with slightly higher growth in 2013 to $361 billion. Nonresidential contractors are facing many of the same problems as residential contractors. In addition, competition is fierce, with low price still dominant. Project owners who are ready to restart their building programs are expecting hungry contractors to submit very low bids. One of the keys for growth will be the return of private investment in construction. Additionally, federal, state and local government construction have been dialed back until budgets are in better repair and tax revenues return to levels that are more normal. Research indicates that there are signs this is starting to happen, says FMI.
Click here to read the Construction Outlook First Quarter 2012 report.
