McGraw Hill has released an update on its 2012 economic forecast for the construction industry. Although there seems to be a slight rebound on residential construction starts, the overall numbers have not improved. Rather, they have flattened out and remain low
Total new construction starts are presently projected to come in at an increase of 2.5%. While this is better than the 0.3% of the previous year, it is hardly large growth. The small increase is being driven by a larger than expected rebound in the housing market. Single family housing is now expected to increase 21% in dollar value this year and multi-family housing is set to go up by 19%. Private non-residential building will only rise by 2%.
Gains such as these are not having a bigger impact on the overall construction numbers because manufacturing (20% decline) and commercial office space (2% decline) are both down. Institutional construction is also down by 10% or more, heavy highway and bridge is down 12%, and environmental is down 9%.
The Department of Commerce also published some discouraging news. Growth in public sector work has declined for the fourth consecutive month. On a year to date basis, public construction through May 2012 was down 3.5% when compared to the year before. Fewer public school projects – which account for 25% of public construction project expenditures on average – and large decreases in public housing projects lead the way in this regard.
While there are some glimmers of hope, it seems the construction market has a ways to go before it gets back into full swing.