As the big, brain-crushing campaigns of the 2012 Presidential elections begin, the economy has already been set out as the lynchpin issue. For the past four-plus years, economic uncertainty has certainly plagued the construction industry, more than almost any other sector, and some folks don’t see it getting any better next year.
“I’m not buying into the proposition that the nation’s construction industry will recover in 2013,” said Anirban Basu, the chief economist at the Associated Builders and Contractors (ABC), during a national online news conference in June. “What we have right now is an utter lack of confidence in the economy, and confidence represents a centrally important requirement for construction spending growth.”
ABC represents some 22,000 merit shop construction firms mostly in the industrial and commercial sectors. Other construction-focused market analysts took a more cautiously optimistic approach. When it comes to small machinery sales, the residential construction market is the most important segment for Compact Equipment.
According to a recently released second quarter 2012 Construction Outlook Report from the construction consultants at FMI, residential construction is coming back led by 32 percent growth in multi-family housing,
The FMI forecast overall calls for 3 percent growth for construction put in place (CPIP) by the end of 2012 and another 7 percent in 2013 for a total of $882.4 billion. That’s $92.6 billion more than the lows of 2011, so positive forward movement looks probable. Other highlights include: communications construction steadily growing from 4 to 6 percent through 2015 (with 2012 ending up around $18.5 billion); power-related construction rising 10 percent for 2012 and another 10 percent in 2013 (to $108 billion); and some nonresidential construction growth, particularly in private sectors like healthcare and manufacturing.
“Based on the number and variety of projects that have been announced in recent months, I expect the private nonresidential sector to keep posting hefty gains for the rest of 2012 and beyond,” predicted Ken Simonson, the chief economist for the Associated General Contractors of America (AGC). “Apartment construction seems sure to remain strong as well. Single-family homebuilding is not as solid but has apparently passed its low point. Together, these categories should mean that total construction spending in 2012 will be positive for the year for the first time since 2007, despite ongoing weakness in public construction.”
Simonson said the above quote in an AGC analysis for July, which noted that construction spending reached a two-and-a-half year high in May (the highest level since December 2009). Association officials also noted the recent enactment of a federal highway and transportation bill that slightly increases spending over the next 27 months and will keep public construction from falling further.
“Getting a highway and transit bill passed is a great first step,” said Stephen E. Sandherr, AGC’s CEO. “Next, Congress should focus on keeping other forms of infrastructure from falling behind while enacting measures to support broader economic growth.” -- Post Written by Keith Gribbins, managing editor, Compact Equipment