Tag Archives: Construction News

More Good News for the Construction Industry in 2015

Looks like the construction industry is coming back with a vengeance! If last month’s blog about a strong 2014 wasn’t enough, here’s more confirmation that we are heading into better times.

A leader in construction industry analysis, Dodge Data & Analytics, released its report last November, the Dodge Construction Outlook, showing that U.S. construction starts in 2015 will rise 9% to $612 billion!

Also, the report reveals that financing for construction projects is becoming more available, a sign that the lending standards at banks are easing up.

Here is a quick summary of the 2015 Dodge Construction Outlook:

Commercial building – 15% increase. Office construction will lead the way, aided by expanding private development as well as healthy construction activity related to technology and finance firms. Hotel and warehouse construction should also strengthen.

Institutional building – 9% increase. The educational building category is now seeing an increasing amount construction, aided by the financing made available by the passage of recent construction bond measures.

Single family housing – 15%  increase. It’s expected that access to home mortgage loans will be expanded, lifting housing demand.

Multifamily housing – 9% increase. Occupancies and rent growth continue to be strong, although the rate of increase for construction is now decelerating as the multifamily market matures.

Public works construction – 5%  increase. Highway and bridge construction should stabilize, and modest gains are anticipated for environmental public works. Federal spending restraint will be offset by a greater financing role played by the states, involving higher user fees and the increased use of public-private partnerships.

Electric utilities – 9%  decrease. A continuing downward trend that’s followed the exceptional volume of construction starts that was reported during 2011-2012. With more projects now coming on line, capacity utilization rates will stay low, limiting the need for new construction.

Manufacturing plant construction – 16% decrease. But after the huge increases reported during both 2013 (up 42%) and 2014 (up 57%) that reflected the start of massive chemical and energy-related projects, this year’s volume will remain quite high by recent historical standards.

Overall, it looks like another great year for the construction industry and the national economy. Although the Federal Government is still tight with construction funds, the States are stepping in to get more done.

Interest rates should remain low and thus help encourage further expansion in overall contruction activities. Occupancies and rents for commercial building and multifamily housing continue to strengthen, as the economy has in general.

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Construction Backlog Indicator Reaches All-Time High

According to the Associated Builders and Contractors (ABC), its Construction Backlog Indicator (CBI) reached a new all-time high during the third quarter of 2014 at 8.8 months

The Construction Backlog Indicator (CBI) is a forward-looking national economic indicator that reflects the amount of work that will be performed by commercial and industrial contractors in the months ahead.

The 2014 third quarter backlog is 6.9 percent higher than the third quarter of 2013 and the continued growth of backlog during the last six months likely indicates that 2015 will be a strong year of recovery for the nation’s nonresidential construction industry.

ABC Chief Economist Anirban Basu said, “Every region of the nation experienced expanding backlog during the third quarter and so did every industry segment”. Recent data regarding nonresidential construction and employment has shown only sporadic gains, which is consistent with the less optimistic backlog readings registered earlier this year. But the last two quarters tell a positive story that the average nonresidential contractor in America is positioned to get busier.”

“Given the recent acceleration in job growth, the improvement in the quality of jobs being added, and a still-accommodative Federal Reserve, the U.S. macroeconomic outlook for 2015 represents the most upbeat assessment of economic prospects during the post-recession period,” said Basu.

“The nation has added more than 2.6 million jobs over the past 12 months and, for the first time in six years, the nation’s unemployment rate has dipped below 6 percent. While there are a number of headwinds, including a still-shaky global economy and a meaningful dip in oil prices that is likely to impact both oil production and related capital spending, most leading indicators remain positive. Lending conditions appear to be easing and a booming stock market has generated both positive wealth and confidence effects.”

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