FMI cautiously optimistic on construction growth

By |  June 5, 2014

FMI says e-commerce is affecting construction growth, according to its latest construction outlook.

The company’s Construction Outlook Report Q2 2014 shows cautiously optimistic growth, as the forecast has been lowered a percent since the Q1 2014 report. FMI now predicts construction-put-in-place (CPIP) for 2014 to increase 7 percent over 2013 levels.

One reason for the drop is e-commerce, which is becoming a larger market, especially in the retail and educational industries, according to the company. As people spend more time online, brick and mortar will grow more slowly, a trend that also is affecting office, travel, recreation and health care.

FMI predicts the commercial growth rate will slow to 6 percent in 2014, with retail production slowing due to the expansion of e-commerce shopping.

Construction for the transportation industry is one of the few areas that continues to see solid growth, with 2014 predicted to grow 7 percent, the company says. The shale oil boom, as well as the proposed $73.61 billion transportation bill, are large contributing factors.

With new jobs and pay scales not rising as fast as costs, the residential forecast was adjusted from 18 percent growth to 12 percent in 2014, according to FMI. In addition, affordability, mobility and uncertainty in the job market is evident as new-home growth is slowing and renting remains a safer choice for many.

With political uncertainty continuing to hold off new health care facilities, the company says the health care forecast is for CPIP to remain flat in 2014. The $40.8 billion in new construction is expected to continue at a sustainable pace, however.

To download a copy of the full report, click here.

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