FMI, a provider of management consulting and investment banking to the engineering and construction industry, released its second quarter 2012 Construction Outlook Report. FMI's forecast 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. This is $92.6 billion more than the lows of 2011.
Despite the constant confusion of news from Europe and uncertainty and inaction in the U.S. Congress, there are some positive signs in the economy. As one might expect, improving housing construction is helping to lead the way, especially multi-family housing. However, power construction is another strong point, and even commercial construction will show signs of rising from its slumber. Nonetheless, slow growth may be even more challenging than large market drops or boom times because it requires improved management, precision market research and creative business development.
Residential construction is coming back led by 32 percent growth in multi-family housing. In nonresidential construction the forecast is mixed with healthcare and manufacturing showing the most positive signs of growth.
- Lodging CPIP is expected to grow 4 percent and rebound somewhat to 7 percent and 8 percent in 2013 and 2014.
- Office construction should be 4 percent by the end of 2012 and improve to around 6 percent for 2013 through 2014.
- Commercial construction is beginning to grow again. FMI expects 5 percent growth in CPIP this year, followed by 8 percent growth in 2013 to around $49 billion.
- Healthcare construction is expected to only rise 3 percent in 2012; that will strengthen to double digits by 2015, achieving record highs around $52.6 billion.
- Education construction will have only a 1 percent increase in CPIP in 2012 and a slight rise of 2 percent in 2013.
- Religious construction will be flat in 2012 with some revival in 2013 to 6 percent growth at $4.3 billion.
- Public safety construction will be flat in 2012 but will grow 6 percent in 2013 to $4.3 billion.
- Amusement and recreation construction will climb 8 percent to $17.4 billion in 2013.
- Transportation construction will grow 3 percent in 2012 and to 5 percent through 2015.
- Communications construction will experience steady growth of 4 to 6 percent through 2015 with 2012 ending up around $18.5 billion.
- Manufacturing construction is expected to rise 3 percent in 2012 and show steady increases to 2015.
- Power-related construction is forecasted to have a 10 percent rise for 2012 and another 10 percent in 2013 to $108 billion.
- Highway CPIP will drop 2 percent in 2012 and grow just 1 percent in 2013 to reach $77.7 billion or back near 2007 levels.
- Sewage and waste disposal CPIP is expected to be around $23.9 billion.
- Water supply is beginning to grow but will gain only 2 percent in 2012 and 3 percent in 2013 to reach $14.7 billion.
- Conservation and development growth is expected at 2 percent in 2012 and demonstrate slow, steady progress through 2015.