Contractors may be looking at a sluggish construction year in 2012, at least according to the Associated Builders and Contractors.
ABC released its 2012 economic forecast for the U.S. commercial and industrial construction industry.
“ABC’s analysis of construction trends indicates 2012 will be a year of gradual progress as advances in private construction are partially offset by ongoing declines in publicly financed construction,” said ABC chief economist Anirban Basu.
The economist said that nonresidential construction spending should grow 2.4 percent in 2012 following a 2.4 percent decrease in 2011.
“The pace of recovery in the nation’s nonresidential construction industry remains soft and 2012 is positioned to be a year of slow gain,” he said. “The first half of 2012 may be particularly challenging, a reflection of the soft patch in economic activity experienced during much of the first half of 2011.”
Employment in the nonresidential building sector is expected to increase 0.4 percent in 2012 following 0.6 percent growth in 2011.
“Employers will continue to seek increased productivity among existing workers in order to boost weak industry margins,” said Basu.
ABC also said that construction contractors may get some relief with material prices. In 2011, prices for construction materials rose 7.5 percent. ABC expects 2012 materials prices will rise 4.7 percent. Despite a slow construction recovery, input prices are likely to remain elevated as global investors retain significant ownership in commodities and hedge against risks emerging from Europe, the United States, China and Brazil.
“The direction of the U.S. dollar will play a major role in determining construction input prices in 2012,” said Basu. “However, the dollar’s direction is far from obvious.”
While 2012 is looking to be a slow year, ABC’s analysis has the construction industry going in the right direction.
“For the most part, 2011 has been disappointing. However, recent economic news has been more positive, including data regarding the gross domestic product, business investment and exports,” Basu said. “If the U.S. economy continues to progress, eventually this will translate into more vigorous recovery in the nation’s nonresidential construction sector.”