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Forecaster sees modest growth rate across key construction sectors

Source: FMI Corp., Raleigh, N.C.

Construction activity in 2015 is expected to grow at 5 percent, leveling off from the previous forecast of 8 percent in the first quarter of 2015, according to the Q2 Construction Outlook from lead management consultant FMI. “Construction spending continues to build on the rapid growth experienced in the industry last year,” says Senior Managing Director and President of Investment Banking Chris Daum. Although the Q2 Outlook is lower than last quarter’s, he adds, it still finds 2015 logging the highest total for construction put in place since 2008.

The report examines 17 residential, non-residential and non-building sectors. Areas with strong projected growth include residential, manufacturing, commercial, amusement and recreation, office, lodging and transportation. The sector with the best prospect is manufacturing, which continues to show gains in construction activity despite several factors that point to slower growth for 2016, continuing through FMI’s forecast horizon of 2019. Tempered activity indicates the cyclical nature of manufacturing-driven construction, plus the strong dollar’s effect on U.S. exports. With a 5 percent cut on the horizon, the sector with the biggest setback is power, which remains in flux due to changing fuel supplies—more natural gas, less coal—plus variable growth rates in alternative energy sources like solar and wind.