Construction Economy Outlook: Recovery Has Begun And Will Extend Into 2014

The construction market has bounced agonizingly along the bottom of the economic cycle for months, but Gilbane Building Co.’s recent economic analysis (Construction Economics – Market Conditions in Construction) suggests market growth for general contractors beginning now and sustaining into the next couple of years.

Some of the positive factors in Gilbane’s report are:

The Architectural Billing Indicator (ABI) – a leading indicator of construction spending 9 to 12 months out – accurately predicted a drop in spending from Q4 2011 through Q2 2012 which may be ending.

The ABI has been predicting growth starting in May 2012

The spending rate is 9 percent above one year ago and 4 percent above last summer.

And, construction spending should increase over 5 percent in 2012 Contractors’ margins improved by 1 percent in 2011 and seem to be signalling a movement toward normalized margins

However, the report still shows some negative factors affecting the industry:

The construction industry gained only 5,000 jobs in three months since December 2011

The nine states with the most construction jobs lost 137,000 jobs over the last four months

Construction starts have been declining, hitting a 15-month low in February 2012

Construction volume has decreased five years in a row

Construction spending on public jobs is below what is was a year ago