While most people know that the construction industry recovery has been painfully slow, signs exist that optimism is starting to emerge.
Corporate profits have increased, according to Kermit Baker, chief economist with the American Institute of Architects, allowing companies more breathing room to invest. Baker and several other economists held a press conference in mid-June to discuss the state of the construction industry and their forecasts for the coming months.
Many construction sectors have shown life, said Anirban Basu, chief economist for the Associated Builders and Contractors. As of April 2012, the following subsectors have improved, compared to a year earlier:
- Manufacturing: up 27%
- Power: up 19%
- Commercial: up 10%
- Office: up 8.9%
- Highway and Streets: up 3.5%
Sectors that have fallen include conservation and development (down 24%) and water supply (down 1.4 %).
Basu cited lack of confidence as the reason for the dearth of jobs in the industry. Although gross domestic product expanded for the past 12 consecutive quarters, job growth is decelerating.
Overall, economists believe that lack of confidence and nervousness are the major roadblocks to the industry. Regarding the November presidential election, they believe that no matter who is elected, there will be no dramatic changes in policy.
David Crowe, chief economist for the National Association of Homebuilders, notes policy uncertainties ahead include the future of Dodd-Frank regulations, tax reform, debt and deficit reduction, and the flow of credit.
— Kelley Lindsey is a Hanley Wood Commercial Group editorial intern.