Sources: Associated Builders and Contractors, Washington, D.C.
“A combination of low interest rates; wealth effects stemming from a booming stock market and rising home prices; surging energy production; and expanding industrial output has helped position the U.S. economy for more rapid growth during the next several quarters,” says ABC Chief Economist Anirban Basu. “This will lead to more robust recovery in the U.S. nonresidential construction industry, which has also been aided by stable materials prices and improving commercial real estate fundamentals.”
In a collaborative forecast with his American Institute of Architects and National Association of Home Builders counterparts, Basu projects 7 percent nominal nonresidential construction market growth this year, despite challenges in the public construction segment.
“We continue to have an optimistic outlook for the commercial and industrial sectors for the rest of this year and into 2015,” adds AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “However, until we see state and local governments ramp up spending for new education, health care and public safety structures there likely won’t be a widespread acceleration in spending for the entire industry.”
“Economic pick-up in the second quarter was coupled with a return in housing construction,” notes NAHB Chief Economist David Crowe. “We expect continued modest growth in housing construction as employment rises and more household formations take place. However, continued tight supplies of labor and land will put upward pressure on new home prices.”
The collaborative forecast dovetails the release of the AIA Architecture Billings Index (July 23) and NAHB/Wells Fargo Housing Market Index (July 16), plus the ABC Construction Backlog Indicator (August 19).