Business Specialties Development
Dec 31, 2007
By: Michael Fickes, Contributing Correspondent
By and large, the construction industry is worried about 2008.
With only a few exceptions, 2008 forecasts by the Portland Cement Association (PCA) and McGraw-Hill Construction projected declines in virtually all segments of the non-residential building construction market. FMI Corp., a Denver-based research firm, was a bit more optimistic, predicting construction growth, albeit at a significantly slowed rate.
In a prepared statement, PCA’s chief economist, Ed Sullivan (pictured) noted, “Our forecast anticipates the impact of a significant economic growth slowdown on the construction industry, but does not predict a recession.”
That said, the PCA forecast judged that there was a 40 percent chance that the economy would fall into recession over the next six months, if the sub-prime crisis turns out to be worse than expected and if energy costs reduce consumer spending.
As reported in the Nov. 19 edition of Engineering News Record, PCA projects that total construction put-in-place will decline by 3.7 percent in 2008. Non-residential construction, which increased by 12.9 percent in 2007, will fall by 3 percent in 2008. Commercial construction will be the biggest loser, with a projected decline of 6.4 percent. Educational buildings and healthcare facilities will be the exceptions. The PCA forecasts suggested that those categories would rise by 4 percent and 3.9 percent respectively.
McGraw-Hill Construction’s forecast of contract awards for next year shows similar percentage declines in the non-residential building market. Total construction will fall by 2 percent next year; office will decline by 3.4 percent; retail will fall by 6.8 percent; hospitality will drop 8.9 percent; and other commercial construction contract awards will lose 9.4 percent from this year. The bright spot in non-residential building construction for McGraw-Hill will be educational buildings, a category expected to rise by 7 percent.
By comparison, the forecast from FMI Corp. is relatively optimistic. It called for growth of 1.9 percent in total construction put-in-place during 2008. All segments of the residential construction market will continue to decline in 2008 but at a much more manageable pace.
But the FMI Corp. analysis said that all segments of the non-residential building market would rise by fairly comfortable percentages. Office will go up by 2 points; commercial will increase by 2 percent; lodging will jump by 4 percent; and health care will surge by 12 percent. Overall, non-residential building will rise 5.2 percent, according to FMI.
By: Michael Fickes, Contributing Correspondent
By and large, the construction industry is worried about 2008. With only a few exceptions, 2008 forecasts by the Portland Cement Association (PCA) and McGraw-Hill Construction projected declines in virtually all segments of the non-residential building construction market. FMI Corp., a Denver-based research firm, was a bit more optimistic, predicting construction growth, albeit at a significantly slowed rate.
In a prepared statement, PCA’s chief economist, Ed Sullivan (pictured) noted, “Our forecast anticipates the impact of a significant economic growth slowdown on the construction industry, but does not predict a recession.”
That said, the PCA forecast judged that there was a 40 percent chance that the economy would fall into recession over the next six months, if the sub-prime crisis turns out to be worse than expected and if energy costs reduce consumer spending.
As reported in the Nov. 19 edition of Engineering News Record, PCA projects that total construction put-in-place will decline by 3.7 percent in 2008. Non-residential construction, which increased by 12.9 percent in 2007, will fall by 3 percent in 2008. Commercial construction will be the biggest loser, with a projected decline of 6.4 percent. Educational buildings and healthcare facilities will be the exceptions. The PCA forecasts suggested that those categories would rise by 4 percent and 3.9 percent respectively.
McGraw-Hill Construction’s forecast of contract awards for next year shows similar percentage declines in the non-residential building market. Total construction will fall by 2 percent next year; office will decline by 3.4 percent; retail will fall by 6.8 percent; hospitality will drop 8.9 percent; and other commercial construction contract awards will lose 9.4 percent from this year. The bright spot in non-residential building construction for McGraw-Hill will be educational buildings, a category expected to rise by 7 percent.
By comparison, the forecast from FMI Corp. is relatively optimistic. It called for growth of 1.9 percent in total construction put-in-place during 2008. All segments of the residential construction market will continue to decline in 2008 but at a much more manageable pace.
But the FMI Corp. analysis said that all segments of the non-residential building market would rise by fairly comfortable percentages. Office will go up by 2 points; commercial will increase by 2 percent; lodging will jump by 4 percent; and health care will surge by 12 percent. Overall, non-residential building will rise 5.2 percent, according to FMI.
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