FMI, management consultants and investment bankers to the building and construction industry, recently revised downward its outlook for 2009.
The Construction Outlook, a quarterly construction market forecast developed by FMI’s Research Services Group, indicates construction for 2008 remains down, and the outlook for 2009 has been revised down slightly because a downturn in nonresidential construction usually lags a slowdown in the general economy.
Recently released economic indicators are somewhat mixed. Housing, credit tightening, consumer spending and inflation continue to hinder the economy. While the general economy begins to stabilize somewhat, nonresidential construction is expected to falter late in 2008 and into 2009.
“The Fed continues cutting rates to stimulate the economy, but inflation is becoming a threat and a pause is likely,” said Heather Jones, construction economist for FMI’s Research Services.
The Construction Outlook also reports that water is an important concern in the United States. Aging infrastructure, population growth and net migration are fueling demand for new and replacement construction especially in the Sunbelt and Rustbelt regions. Water supply and sewage and waste disposal construction will increase by 2 percent and 3 percent in 2008 and by 2 percent and 4 percent in 2009 despite a decrease in state and federal revenues.
Total construction in 2008 and 2009 will be down 4 percent and 1 percent, respectively, based upon large decreases in residential construction that will not be offset by gains in nonresidential and nonbuilding construction. The decline in 2009 will be driven by a decrease in nonresidential construction for the first time since 2003.
Historical information in FMI's Construction Outlook is based on building permits and construction put in place data as provided by the U.S. Commerce Department. Forecasts are based on econometric and demographic relationships developed by FMI, on information from specific projects gathered from trade resources and on FMI’s analysis and interpretation of current and expected social and economic conditions.
FMI, management consultants and investment bankers to the building and construction industry, delivers innovative solutions to contractors, architects and engineers, construction materials producers, manufacturers and suppliers of building products and construction equipment, private owners, residential builders, utilities, government agencies, surety companies and trade associations.
Founded in 1953, FMI is headquartered in Raleigh, N.C., and has offices in Denver, Napa, Calif., Phoenix and Tampa, Fla. For more information, visit www.fminet.com.