Report: Construction Industry Could See Downturn in Early 2013

Architectural Billings Index indicates increasing spending through the end of the year followed by a slowdown in the beginning of 2013

Gilbane Building Company announces the publication of the Fall 2012 edition of Construction Economics - Market Conditions in Construction. Based on an array of economic data, construction starts and material cost trends, this free report indicates an increase in construction spending over last year but cautions of an expected downturn again in early 2013. The Architectural Billings Index (ABI), which predicts activity nine to 12 months out, indicates increasing spending nearly through the end of the year before another slowdown.

"Jobs continue to be the difficulty in this construction recovery. They are at a near standstill, while spending continues a slow climb," says Ed Zarenski, the report's author and a 40-year veteran of the construction industry. "A nugget of good news, though, is that climb may mean productivity is increasing. Spending is up only 2.5 percent since the beginning of the year, but up 6 percent from a year ago. Supported by positive growth trends, contractors may be able to recover a bit of lost margins."

According to the report, the construction industry has seen a small but continued growth in contractor's margins that started a very slow return to positive in 2011. Material price increases and labor cost growth will still contribute to escalation. Contractors' building costs "charged" in 2012 are above labor and material cost increases, signaling a continued movement towards recovery of more normalized margins.

Among the topics covered in this comprehensive report are:

  • Construction starts, spending and costs
  • Material price movement
  • Trends and costs for structural steel, recycling steel, and copper
  • Architectural Billings Index
  • Current inflation forecast
  • ENR Index
  • BCI history