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12/19/2011 - Commercial, Manufacturing Construction-Bright Spots in 2012

Commercial, Manufacturing Construction Are Bright Spots in 2012

Overall, U.S. construction starts for 2012 will remain essentially flat, and the level of construction starts is expected to be $412 billion, following the 4 percent decline to $410 billion predicted for 2011, according to McGraw-Hill Construction (New York) in its annual construction forecast for 2012.

The construction industry has struggled to see recovery take hold over the past couple of years. After plunging 24 percent in 2009, new construction starts leveled off in 2010 and have hovered within a set range during 2011, said Robert Murray, vice president of economic affairs, McGraw-Hill Construction.

“The backdrop for the construction industry is the fragile U.S. economy, which continues to see slow employment growth, diminished funding from federal and state governments and pervasive uncertainty,” Murray added. “In 2012, the top-line numbers are not expected to show much change, but there will be variation within the major construction sectors with some gains predicted for housing and commercial building—assuming the U.S. economy avoids recession.” Based on significant research and in-depth analysis of macro-trends, the 2012 Dodge Construction Outlook details the forecasts for nonresidential construction sectors as follows:

  • Commercial building will grow 8 percent. Warehouses and hotels will see the largest percentage increases, but improvement for offices and stores will be modest.
  • The institutional building market will slip an additional 2 percent in 2012, after falling 15 percent in 2011. The tough fiscal environment for states and localities will continue to dampen school construction, and the uncertain economic environment will limit growth in health-care facilities.
  • Manufacturing buildings will increase 4 percent, following the 35 percent gain in 2011, as the low value of the U.S. dollar continues to support export growth.
  • Public works construction will drop a further 5 percent, after a 16 percent decline in 2011, due to spending cuts and the absence of a multiyear federal transportation bill for highway and bridge construction.
  • Electric utilities will retreat 24 percent, following a 48 percent jump in 2011.
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