When U.S. construction starts leveled off in 2010, after plunging 24 percent in 2009, forecasters had hopes for renewed expansion in 2011. The recovery for the construction industry, however, has struggled to take hold (-4 percent in 2011), and McGraw-Hill Construction now forecasts that new construction starts will remain flat (0 percent) in 2012. “The backdrop for the construction industry is the fragile U.S. economy, which continues to see slow employment growth, diminished funding from federal and state governments, and pervasive uncertainty,” said Robert Murray, vice president of economic affairs, McGraw-Hill Construction. Murray discussed the forecast on Oct. 19 at the Outlook 2012 Executive Conference in Washington, D.C., where McGraw-Hill released its 2012 Dodge Outlook Report. “In 2012, the top-line numbers are not expected to show much change, but there will be variation within the major construction sectors, with some gains predicted for housing and commercial building assuming the U.S. economy avoids recession.”
McGraw-Hill forecasts commercial building starts to grow 6 percent in 2011 and 8 percent in 2012. Warehouses (18 percent in 2011, 17 percent in 2012) and hotels (34 percent in 2011, 17 percent in 2012) will see the largest percentage increases, but improvement for offices (-2 percent in 2011, 4 percent in 2012) and stores (0 percent in 2011, 2 percent in 2012) will be modest. Institutional building, McGraw-Hill reports, will slip 2 percent in 2012 after falling 15 percent in 2011. Tough fiscal environments for states and localities will continue to dampen school construction (-14 percent in 2011, -9 percent in 2012), and healthcare facilities building will decline 1 percent in 2012 after remaining flat (0 percent) in 2011.