Look for the American construction economy to continue expanding in 2013, but the pace won’t break records, analysts from the Associated Builders and Contractors said.
“ABC predicts nonresidential construction spending will expand 5.2 percent in 2013,” said Anirban Basum, the association’s chief economist. “Given the remarkably deep reductions in nonresidential construction spending since the onset of the downturn, one would expect more robust growth during the fourth year of broader economic recovery.
“Thanks to a handful of segments experiencing more rapid economic recovery, much of the construction expansion next year will be in categories heavily associated with private financing,” Basu said. “Due largely to constrained capital budgets at state and local government levels, as well as ongoing turmoil in Washington, D.C., publicly funded construction spending is expected to be flat next year, and perhaps worse.
“The fastest growing major U.S. industry during the last year in terms of absolute job creation was professional and business services,” said Basu.
But because many companies in this category use office space, office-related construction spending is expected to increase 10 percent.
“Consumer confidence also has progressed,” Basu added. “Accordingly, ABC predicts total commercial construction will expand roughly 10 percent next year. Other industries positioned to experience rising levels of investment include power, up 10 percent; lodging, up 8 percent; health care, up 5 percent; and manufacturing, up 5 percent.
“Nonresidential building construction employment is expected to expand 2.1 percent in 2013, slightly better than the 1 percent performance estimated for 2012,” Basu added. “Construction materials prices should rise a bit more rapidly in 2013 than they did in 2012, with substantially more volatility to be experienced from month to month next year.
“Despite ongoing slowdown in many of the world’s largest economies, ABC anticipates many investors will opt to invest in hard assets as a way to avoid volatility in equity and bond markets,” Basu said.