FMI forecasts modest growth in 2014 for residential, commercial construction
Health-care, educational and manufacturing construction to also post modest growth.
Construction management consulting firm FMI (www.fminet.com) released its Q3-2013 Construction Outlook Sept. 16. The markets continue to shift, reducing annual Construction-Put-In-Place predictions to $909.6 billion, down nearly $4 billion from previous predictions. Early forecasts for 2014 show annual CPIP continues moderate growth of 7%, rising to $977 billion.
Major market predictions include:
• Residential construction — FMI continues to forecast traction in residential construction. However, the growth is expected to taper off to 12% in 2014. Total predicted residential forecast is $379.6 billion, compared with the $338.2 billion for 2013.
• Commercial construction — The current forecast calls for a 5% increase in 2014. Although retail sales as of June 2013 were up 5.7% over the previous year, new brick-and-mortar retail space along with other commercial construction growth will remain slow to recover.
• Health care —With business owners nervous about the costs of the Affordable Healthcare Act, predictions are slightly unstable. Although the health-care construction forecast slipped 1% since last year, it is still expected to grow 6% in 2014 to $44 billion.
• Educational — The increase in residential construction and tax revenues will help bring this market back in many areas of the country. Due to budget cuts for government spending at all levels, the national market will rise only slightly in 2014 to 4% over 2013 levels.
• Manufacturing — The resurgence of the automotive industry is a big boost to manufacturing as is the continuing explorations and mining for shale oil and gas. However, manufacturing construction is expected to drop 2% by year-end 2013 before returning to 4% growth in 2014.
• Highway and street — Passage of MAP-21 calls for nearly $38 billion for the fiscal year 2014 for the Federal-Aid Highway Program. This is a major contributor to the CPIP predications of nearly $80 billion for 2014.
While there is no singular reason for change in these markets, there are a few economic concerns that touch all of them:
• Potential conflicts with Syria;
• Downsizing of government and large companies; and
• The implementation of Affordable Healthcare Act.
To download a copy of the full report, go to http://hosting.fyleio.com/21574/public/FMI_Studies_and_Reports_/Outlook_Q3_2013_FINAL.pdf.
Photo credit: Joe Mabel