Concrete Products covers the issues that attract producers of ready mixed and manufactured concrete focusing on equipment and material technology, market development and management topics.
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20 • September 2016 www.concreteproducts.com NEWS SCOPE MARKETS The Associated Builders & Contractors, American Institute of Architects and National Association of Home Builders chief economists assembled in Washington, D.C., for a mid-year market forecast, outlining stable to strong residential and commercial project activity through 2017. "Nonresidential construction spending growth will continue into the next year with an estimated increase in the range of 3 to 4 percent," said ABC Chief Economist Anirban Basu. "Growth will continue to be led by privately financed projects, with commercial construction con- tinuing to lead the way. Energy-related construction will become less of a drag in 2017, while public spending will continue to be lackluster." "Our forecast shows single-family production expanding by more than 10 percent in 2016, and the robust multifamily sector leveling off," noted NAHB Chief Economist Robert Dietz. "Historically low mortgage interest rates and favorable demographics should keep the housing market moving forward at a gradual pace, but residential construction growth will be constrained by shortages of labor and rising regulatory costs." "Revenue at architecture firms continues to grow, so prospects for the construction industry remain solid over the next 12 to 18 months," added AIA Chief Economist Kermit Baker. "Given current demographic trends, the single-family residential and the institutional building sectors have the greatest potential for further expansion at present." Each economist discussed leading, present and future indicators for sector performance, including ABC's Construction Backlog Indicator; AIA's latest Architecture Billings Index and Construction Consensus Forecast; and, the NAHB/Wells Fargo Housing Market Index. NONRESIDENTIAL MARKET The joint forecast with AIA and NAHB followed an ABC assessment of mid-year nonresidential construction spending and market trends. Activity in the sector dipped 1 percent in June, a third consecutive month of contraction, according to an ABC analysis of U.S. Census Bureau data. Nonresidential spending, which totaled $682 billion on a seasonally adjusted, annualized rate, fell 1.1 percent on a year- over-year basis, marking the first such decline on an annual basis since July 2013. "On a monthly basis, the numbers are not as bad as they seem, as May's nonresidential construction spending estimate was revised higher. However, this fails to explain the first year-over-year decline in nearly three years," says ABC's Basu. "There are many forces at work, most of them negative, with the noteworthy exception of con- struction materials prices, which are down on a year-over-year basis. To the extent that savings are being passed along to purchasers of construction services, spending would appear lower in dollar terms than when measured in physical terms such as square footage. "Thanks in part to the investment of foreign capital in America, spending related to office space and lodging are up by more than 16 percent year-over-year. The global economy is weak, and international investors are searching for yield and stability. U.S. commercial real estate has become a popular destination for foreign capital. However, the weakness of the global economy may also help explain the decline in manufacturing-related construction spending of nearly 5 percent for the month and more than 10 percent year-over-year. Top forecasters confirm private sectors' growth prospects