The U.S. construction sector, in addition to the overall economy, will continue to accelerate at a mild pace throughout 2013, according to the ITR Trends 10 report from ITR Economics. “2013 will be better than 2012,” says Jeff Dietrich, senior analyst. “2013 will see changes in taxes, but the economy overall is relatively stable and still growing, albeit at a milder pace than many would like. … There is no quick fix for construction, or this economy.”
According to the ITR Trends 10 report, nonresidential construction and housing are poised to enter Phase C of the business cycle, meaning they will continue to grow, but at a slower pace. “Construction trends are accelerating out of their steep recessionary hole, especially housing, which is up more than 28 percent from one year ago.”
Nonresidential construction segments currently on the rise include commercial construction, private higher education, private health care, office and private lodging. The exception is publicly funded nonresidential projects, which remain below year-ago levels.
“State, local and even federal projects not already funded have been put on hold,” Dietrich says. He points to three causes: slow employment gains, inflation that is at pace with wage increases, and a disappearance of stimulus dollars. “It’s more likely that federal projects will go forward than state and local, which are still battling huge deficits left over from the recession. A bottom is forming, but it will be another two years before cities, towns and municipalities feel like they can open the coffers and spend more.”
ITR forecasts that nonresidential construction will grow at a mild pace in 2013 before experiencing a soft landing by mid-2014. Housing, on the other hand, “may be flat in 2014, but nothing like 2008,” Dietrich says.
As the glass industry continues to dig out from the recession, Dietrich encourages companies to be smart and not shy away from investing. “The world rebooted in 2008 for many industries, but did not die. Many are coming out stronger, wiser and more profitable than before. It can be done.
“The next several years will see ongoing growth in construction sectors,” he says. “Glass industry members need to focus on providing better products at competitive prices with exceptional service. … Work on relationships in 2013. Watch your balance sheets, control inventory, and increase market share, and revenues will rise in 2014. Offer new products and/or services, and increase your sales team,” Dietrich advises.
