Construction Spending Expected To Fall Next Year

Lexington, MA, Sept. 23, 2009--U.S. construction spending is likely to fall 12 percent this year and 4 percent next year, according to IHS Global Insight Third Quarter Construction Briefing.

However, the firm predicts double-digit growth on an annual basis in 2011 and 2012.

“The mixed outlook for the construction market mirrors the mixed outlook for the broad economy,” IHS Global Insight noted in its report.

“While the outlook for nonresidential construction is weak for this year and next, residential construction – driven by a single-family market verging on recovery – is expected to expand in the second half of 2009, climbing 2.1 percent, quarter-on-quarter, in the third quarter and 4.8 percent in the fourth."

Commercial construction is expected to fall 27.9 percent this year, while occupancy rates in commercial properties – such as office buildings, hotels and retail stores – are falling and rents continue to drop.

“The combination of shrinking revenue and tight credit markets is acting as a roadblock to businesses seeking additional financing,” IHS noted.

Total spending on hospitals and other health care buildings continues to increase steadily, driven particularly by rapid expansion in public health care construction.