Total Construction Spending Jan 2008 - Mar 2013
Ken Simonson, of AGC, expects total construction spending in the U.S. to grow 5% to 10% in 2013, following 10% growth in 2012.
12-Month percentage change, construction's three sectors
Simonson expects 10% growth by year’s end for both private nonresidential and residential spending (red and green lines). But public construction spending (blue), should continue to decline at -2% to -5%.
12-month percentage change in single- and multi-family housing
Housing starts were up 28% in 2012, and the average of nine forecasters suggests +30% to just over 1M starts in 2013. Simonson expects multifamily construction starts to continue growing through 2014, but says the single-family rise could flatten by year's end as buyers in select markets succumb to rising prices and tight lending.
Power Construction Spending, 2008 to present
Power construction is the largest nonresidential construction sector, and Simonson expects it to grow 4% in 2013 thanks to development of shale energy.
Private Transportation Construction, 2008 to present
Transportation construction the fastest-growing nonresidential sector (+19% in 12 months ended March 2013), benefiting from shale-energy development and ports prepping for bigger ships coming through the expanded Panama Canal.
Public Transportation Construction, 2008 to present
Shale and port development were able to draw increased public investment in transportation facilities during 2012, although the 2013 outlook for this sector remains flat.
Percent-change forecast for nonresidential construction spending sectors
Kermit Baker, with AIA, reads real strength in commercial construction and expects 8.6% growth there, with the general economy muting industrial construction (+5%) and the institutional sector lagging, as usual, until 2014.
Commercial and residential values 2005 to present
Baker says commercial property values dropped further than residential values, but had regained 40% of what they lost by 2010. And commercial property values continued to climb along that curve.
National office vacancy percentage, 2002 to present
Baker is further encouraged by the fact that office vacancy rates climbed only to the levels of the last 2003-04 recession (a much milder one) and are trending solidly down.
AIA Architecture Billings Index, three construction sectors
Baker says architecture billings -- which lead construction activity by nine to 12 months -- are seeing the strongest growth since the downturn began with eight straight months of gains.
AIA Architecture Billings Index, four regions
Business conditions are positive for architects in all four of AIA's regions, suggesting that Sunbelt areas are working through excess inventory.
Three-Month moving average percent change in state economies
Bernard Markstein, with RCD, expects more state economies to grow slowly with the economy into the green zone.
Total Construction Spending, Reed Construction Data Forecast
Markstein expects total construction spending to continue rising despite a likely seasonal blip downward early in 2013.
Construction-industry economists brought together for a Reed Construction Data webcast in May revisited 2013 forecasts through the lens of first-quarter results.
The various sectors of the construction economy presented a mixed bag of performance in the first quarter of 2013, but the consensus among Bernard Markstein, chief economist with RCD; Kermit Baker, chief economist with the American Institute of Architects; and Ken Simonson, chief economist with the Associated General Contractors, is that the industry continues to grow at about the same pace as in 2012.
It’s agonizingly slow but consistent with earlier forecasts, and far better than the slide the industry experienced from 2008 to 2011. A little attention to the various sectors quickly identifies the best business opportunities.
Flip through the graphs in this article's image carousel for the 2013 construction forecast details.