New Construction research report from Business Monitor International is now available from Fast Market Research
Boston, MA -- (SBWIRE) -- 03/12/2013 -- BMI View: Q4 2012 data is underlining our view that the US construction industry is experiencing growth for the first time in seven years. Whilst momentum is strong going into 2013, we believe that in the second half of 2013 base effects will precipitate a natural slowing in growth, leaving 2013 real growth lower than 2012. Residential construction will remain the main driver of the overall construction sector as nonresidential experiences mixed fortunes and infrastructure only flat growth. In the latter sector there are bright spots, primarily stemming from the unconventional energy boom. Over the medium term (2013-2017), growth will slow, however we anticipate it to remain in positive territory.
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Construction spending data for the first ten months of the year shows a significant increase in investment in the sector, which indirectly feeds through to our forecast for construction industry value added. Between January and October 2012 construction spending has increased 7.5% year-on-year (y-o-y), making it the first year of growth in construction investment since 2006.
Since Q2 2011 we have been highlighting that 2012 would see a return to construction sector growth driven by a recovery in the residential construction sector. Residential construction spending has been the biggest driving force for over growth, expanding 12.4% in the first ten months of 2012 (compared to 10M 2011).
Housing starts appear to have bottomed out and a nascent recovery has been underway over 2012, hitting a four-year high in October at 894,000. Strong homebuilder confidence indicates further upside ahead leading us to envisage continued strength in residential construction in 2013.
Non-Residential Mixed Outlook
Non-residential construction has also had a strong year, driven by investment into manufacturing facilities. As the US manufacturing sector has been in a strong uptrend for most of 2012, this has motivated investment into new capacity. In 2013, the outlook could be weaker. November 2012 saw the first month of contraction in US PMI since July 2009, although it is unclear yet if this is the start of a longer trend.
Infrastructure: Divergent Trends
In general the outlook for the infrastructure sector is weak. The November 2012 elections saw effectively no change in the political landscape in the US. This implies further gridlock for spending plans indicating no infrastructure investment is likely over the next 18 months.
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