FMI released its Q4-2013 Construction Outlook. The forecast predicts 2013 to end with 7 percent growth for the construction industry as a whole. Final statistics for construction-put-in-place will be available April 2014.
Construction for highways and streets will continue to try to hold on to current rates of construction, as everyone waits to see if funding from federal and state sources will be all but cut off or continue at current rates, according to the report. “No one expects an appreciable rise in funding,” the report predicts. “Our forecast calls for just 1 percent growth in 2014 and will remain around that level through 2017. The number of public-financed larger projects will be stifled, as future funding changes are highly uncertain. More private funding may become available, but will not compare with lost funding. Over time, this lack of activity could cause a critical backlog in infrastructure needs, especially when we consider ASCE already has calculated a deficit for roads and bridges of a little more than half a trillion dollars over the next five years.”
Highway trends noted are:
- According to ARTBA (American Road & Transportation Builders), “Taking into account changes in wages, materials and inflation, state and local governments awarded $54.3 billion in real highway and bridge contract between February 2012 and January 2013, compared to $55.8 billion in the same 2011-2012 time period.”
- State budgets will continue to be strained, and it will be difficult to get larger projects off the ground due to uncertainty of long-term government funding and highway program renewal.
- The American Council of Engineering Companies (ACEC) reports that, “According to the Congressional Budget Office, the balance of the HTF will be depleted in Fiscal Year 2015, necessitating dramatic cuts in highway and transit spending unless new revenues are provided. Absent congressional action, highway program funding would fall from $40 billion to approximately $4 billion, while funding for transit projects would fall from $11 billion to $7 billion.”
Other market predictions include:
- Transportation – Completed construction of transportation projects in 2013 is expected to end 12 percent above 2012 levels, with additional growth of 6 percent in 2014. The airline industry is expected to play a role in this growth. Airlines are now ordering a record number of new planes to prepare for growth over the next decade.
- Residential – Forecasts show residential construction ending 2013 with 18 percent growth. Multifamily construction has been particularly strong in the past two years with growth of 48 percent in 2012 and 38 percent in 2013. With rents still high and household formations low, multifamily construction is expected to continue growing.
- Power – After a booming return in 2012, power construction slowed to just 2 percent growth in 2013. However, the industry is expected to grow an additional 5 percent in 2014 to reach $101.4 billion.
- Manufacturing – Growth in manufacturing construction will end around 4 percent for 2013. This upward trend will continue, reaching 6 percent or more starting in 2015.
- Lodging – After several years of sharp decline during the recession, lodging construction continues its solid comeback in 2013, growing 18 percent. This sector is expected to grow another 10 percent in 2014. Improvement of existing properties will continue to be a focus for the industry.
- Amusement and Recreation – The recent announcement of a $672 million stadium for the Atlanta Braves gives amusement and recreation construction a 2014 boost. Construction put in place for 2014 should reach $15.7 billion, with additional growth through 2017.