Economic Report Predicts Non-Residential Construction Growth

PROVIDENCE, R.I. — Gilbane Building Company announces the publication of the Summer 2013 edition of Construction Economics — Market Conditions in Construction. Based on an array of economic data, construction starts and material cost trends, the data continues to show positive growth for the industry.

“Supported by overall positive growth trends for year 2013, I expect margins and overall escalation to climb more rapidly than we"ve seen in five years,” says Ed Zarenski, the report's author and a 40-year veteran of the construction industry. “Rates will continue to rise and borrowing costs will add potential cost to future funding of projects. The cheapest time to build is now behind us.”

According to the report, work activity in nonresidential buildings construction slowed in the first five months but is expected to increase substantially in the second half of 2013. Other highlights include :

• Construction spending for 2013 will finish the year 5 percent higher than 2012. All of the growth will be attributed to residential construction.
• The backlog of construction starts from the last two years indicates an upturn in nonresidential spending starting in May 2013.
• The Dodge Momentum Index, although down recently, is still well up since the mid-2011 bottom, indicating growth.
• Along with the DMI, McGraw Hill New Construction Starts and the Architectural Billings Index — both leading indicators — all indicate an increasing rate of activity in the second half of 2013.
• The construction workforce is still 25 percent below the peak. As workload expands in the next few years, a shortage of available skilled workers may have a detrimental effect on cost, productivity and the ability to readily increase construction volume.
• Comments regarding the outlook for economic stimulus have recently caused interest rates to increase rapidly. Lending criteria is still tight and borrowers are cautious about taking on new debt.

This free report and its executive summary are available for download at http://info.gilbaneco.com/construction-economics-summer-2013.