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Aug. 13, 2012: Nonresidential Construction Spending Expected to Be Up in 2012 and 2013

August 13, 2012
WASHINGTON — According to the American Institute of Architects (AIA) semi-annual Consensus Construction Forecast, a sharp spike in demand for industrial facilities so far this year, along with sustained demand for hotels and retail projects factors into what projects to be a 4.4 percent rise in spending this year for nonresidential construction projects, up from a projected 2.1 percent increase in the January forecast. The Consensus Construction Forecast, a survey of the nation’s leading construction forecasters, also projects a 6.2 percent increase in spending in 2013.

“With companies looking to bring back manufacturing jobs from overseas, there has been a sharp rise in demand for industrial facilities, which is leading to an upward revision in projections for future construction spending,” said AIA chief economist, Kermit Baker, Ph.D., Hon. AIA. “Continued budget shortfalls at the state and local level, along with a depressed municipal bond market are holding the institutional market back from seeing similar upticks in spending.”

The commercial/industrial market segment is expected to be up 5.7 percent in 2012 and 10.2 percent in 2013. The institutional market segment is expected to increase only 0.7 percent in 2012 and 3 percent in 2013.

Remarking on risks that could undermine these projections, Baker said, “Federal tax and spending changes — the so-called fiscal cliff — that may come into play in early 2013 could upset the economic applecart and prove detrimental to recovery possibilities. We will likely have a better sense after the presidential election what will happen with regards to the Bush-era tax cuts, Social Security payroll tax, extended unemployment, and deficit reduction plans that will have a ripple effect that will extend to the construction industry.”

Publication date: 8/13/2012

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