Rock Products

JAN 2013

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FEATURE In addition, excitement over the dou‐ ble‐digit growth in residential con‐ struction is also balanced with the disappointment that by 2016 residen‐ tial CPIP will still only be at 65 percent ($200 billion behind) the record high in 2006. This year the overview includes a synopsis of the key trends and dis‐ cussions of important issues facing nine of the non‐residential construc‐ tion sectors. Highlights include: n The uncertainty stemming from the two diverse approaches to economic recovery presented by the U.S. presidential candidates. n How information technology is driving innovation in the energy services market. n The challenge of recruiting, managing and retaining talent. n Concerns over succession planning as industry leaders look toward retirement. n The increasingly vital role of modularization and prefabrication. Nonresidential Construction Prediction In a 2013 construction forecast re‐ leased Dec. 4, Associated Builders and Contractors (ABC) Chief Econo‐ mist Anirban Basu predicted nonresi‐ dential construction spending to expand 5.2 percent next year, with much of the expansion coming from privately financed projects. "With the elections now behind us, the hope is the White House and Con‐ gress will be able to successfully nav‐ igate the nation past its fiscal cliff," Basu said. "If that happens, the latter half of 2013 could be surprisingly good for nonresidential activity given the large volume of construction projects that were put on hold during the course of 2012. However, the baseline forecast calls for only mod‐ erate expansion in nonresidential construction spending next year." According to Basu, rising consumer confidence will lead to a 10 percent expansion in total commercial con‐ struction. He also noted the fastest growing major U.S. industry during the last year in terms of absolute job creation was professional and busi‐ ness services and because many firms in this category use office space, office‐related construction spending is expected to rise 10 per‐ cent. In addition, power is likely to in‐ crease 10 percent, lodging 8 percent, health care 5 percent, and manufac‐ turing 5 percent. In terms of jobs, Basu expects non‐ residential building construction em‐ ployment to expand 2.1 percent in 2013 – only slightly better than the 1 percent performance estimated for 2012. Basu also expects construction materials prices to rise a bit more rapidly in 2013 than they did in 2012, with substantially more volatility to be experienced from month to month next year. New Home Construction Upward trends in recent months among a number of housing indicators point to a slow and steady growth in the nation's housing market in 2013, but several challenges remain, accord‐ ing to the latest economic and housing forecast by David Crowe, chief econo‐ mist for the National Association of Home Builders (NAHB). "Consistent, positive reports on hous‐ ing starts, permits, prices, new‐home sales and builder confidence in recent months provide further confirmation that a gradual but steady housing re‐ covery is underway across much of the nation," said Crowe. "However, stubbornly tight lending standards for home buyers and builders, inaccu‐ rate appraisals and proposals by poli‐ cymakers to tamper with the mortgage interest deduction could dampen future housing demand." Stating there is no consistent national trend, Crowe noted the housing re‐ covery is local but spreading. "We are transitioning from a very low demand level, where most people hold themselves out of the market‐ place, to a case where supply will start being the problem," he said. "As we begin to build more homes to ad‐ dress that supply, the new home stock will be a much more important element of the recovery." Setting the 2000‐2002 period as a baseline benchmark for normal hous‐ ing activity, Crowe said that owner‐ occupied remodeling has returned to previously normal levels. "Multifamily production is also well on its way, back to 69 percent of nor‐ mal," he said. "It's the single‐family market that has the farthest to go, standing at only 40 percent of what is considered a typical market." 20 ROCKproducts • JANUARY 2013

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