FMI predicts construction put in place will see modest growth in 2014.
Photo credit: FMI Corporation
FMI's Q3-2013 Construction Outlook describes shifting markets reducing total-2013 construction-put-place (CPIP) predictions to $909.6 billion, down nearly $4 billion from previous predictions. But that level of construction remains 6 percent higher than 2012's CPIP.
FMI, management consultant and investment banker to the engineering and construction industry, says its early forecasts for 2014 show annual CPIP continuing moderate growth of 7 percent, rising to $977 billion.
Major market predictions include:
- Residential Construction — FMI continues to forecast traction in residential construction. However, growth is expected to taper off to 12 percent in 2014. Total predicted residential forecast is $379.6 billion, compared with the $338.2 billion for 2013.
- Commercial Construction — The current forecast calls for a 5 percent increase in 2014. Although retail sales as of June 2013 were up 5.7 percent over the previous year, new bricks and mortar retail space along with other commercial construction growth will remain slow to recover.
- Healthcare —With business owners nervous about the costs of the Affordable Healthcare Act, predictions are slightly unstable. Although the 2013 healthcare construction forecast slipped 1 percent since last year, it is still expected to grow 6 percent in 2014 to $44 billion.
- Educational — The increase in residential construction and tax revenues will help bring this market back in many areas of the U.S. Due to budget cuts for government spending at all levels, the national market will rise only slightly in 2014 to 4 percent over 2013 levels.
- Manufacturing — The resurgence of the automotive industry is a big boost to manufacturing as is continuing exploration and mining for shale oil and gas. However, manufacturing construction is expected to drop 2 percent by the end of 2013 before returning to 4 percent growth in 2014.
- Highway and Street — Passage of MAP-21 calls for nearly $38 billion for the fiscal year 2014 for the Federal-Aid Highway Program. This is a major contributor to CPIP predications of nearly $80 billion for 2014.
While there is no singular reason for change in these markets, there are a few economic concerns that touch all of them.
- Potential conflicts with Syria
- Downsizing of government and large companies
- Implementation of the Affordable Healthcare Act