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While the construction industry continues to struggle to recover from the recession, a report issued by FMI Corp., Raleigh, N.C., sees some steady increases for this year and solid increases for some market segments in 2005.
The recently released report, The 2003-2004 U.S. Markets Construction Update, notes that although the value of construction spending rose in 2003, the industry continued to experience softness in some sectors. Despite this, FMI’s outlook for 2004 is positive. FMI believes the construction industry is on track for a stable — though not necessarily spectacular — recovery during 2004.
The residential construction sector, which accounts for 51 percent of the construction market, will remain strong going into 2004, according to FMI. Factors driving this activity will shift significantly in 2004-2005, though, as the nation’s record low mortgage rates slowly disappear, leading to a slight dip in put-in-place growth during 2004, with increased growth predicted for 2005 through 2007.
Unlike the residential sector, the nonresidential sector did not perform well during 2003. However, FMI expects this sector to begin recovering in mid-2004. Another sector that has been hard hit by the down economy is public building. Investment in this sector has suffered as many state governments with severe budget deficits cut back on construction spending. FMI predicts that this sector will continue to experience a mixed recovery during 2004 and beyond.
The industrial market will continue to be one of the softer segments of the non-residential market because of widespread industrial vacancies in existing facilities and concerns over manufacturing moving offshore. On the flip side, the FMI report expects office construction to increase slightly in 2004 and experience solid increases in 2005 to 2007. High office vacancy rates in some key market continue to hold back real growth in office construction.
Spending on the infrastructure was also down in 2003; however, FMI expects this sector to resume growth status in 2004 and the following three years. Leading this growth is the need for maintenance and improvements in the nation’s public utilities, highways, streets and water supply facilities.
FMI’s U.S. Markets Construction Overview is available for $85. For more information, call (800) 877-1364.