Record-breaking ConExpo-Con/Agg attendance seemed to run counter with forecasts delivered jointly on the show’s opening day by two of the construction industry’s premier economists
Sources: Associated General Contractors of America, Alexandria, Va.; Portland Cement Association, Skokie, Ill.; CP staff
Record-breaking ConExpo-Con/Agg attendance seemed to run counter with forecasts delivered jointly on the show’s opening day by two of the construction industry’s premier economists. Citing weak GDP, rising inflation, slim job growth, and a desperate housing outlook, AGC Chief Economist Ken Simonson anticipates total construction spending will see a 2 to 6 percent drop in 2008, but noted certain nonresidential construction areas would continue to be strong this year and fuel 4 to 8 percent growth for the overall market segment. Home building, on the other hand, is pacing a 15 to 20 percent drop before it sees a turnaround as early as the end of 2008. Simsonson adds that materials, fuel and labor costs will continue to rise, potentially aggravating the construction slowdown.
PCA counterpart Ed Sullivan does not expect to see any hint of turnaround until well into 2009, and perhaps not until 2010. He cites rising debt and credit problems as primary sticking points for the residential market’s comeback, but also believes 2008 nonresidential building activity will suffer due to a shake up in “business confidence. Sullivan forecasts total construction spending will decline nearly 12 percent during 2008, based on a three-quarter recession. Housing starts are expected to decline 26.5 percent from depressed 2007 levels. Weakening economic conditions are expected to result in a 7.1 percent decline in nonresidential construction during 2008, compared to robust 2007 levels. Finally, PCA’s pessimistic construction outlook reflects a significant moderation in public construction activity during 2008.