Energy Management

2009 Construction Outlook: "The Nonresidential Building Boom is Over"
The nation's economic news went from bad to worse at the end of 2008, and economists warn that the worst is yet to come. The credit freeze, contracted consumer spending, rising unemployment and declining household wealth are driving a recession that could be the most severe occurring since 1981.
The ongoing decline in residential construction may be accelerating as housing starts and permits for new housing construction showed sharp downturns at the end of 2008 and builders continue pressing the brakes in an effort to reduce their inventories.
The nonresidential market has acted as an offset against the losses suffered by the residential market, posting a strong gain in construction spending over 2007. But inflation, tightening credit and weakening demand for new facilities caused by the general economic downturn are slowing the pace of new starts, indicating a slowdown.
Leading business confidence indicators, already weak for most of the year, began tumbling at the end of 2008 and indicate a contractionary business environment for construction and electrical products and services.
Overall, nonresidential spending is expected to decrease by 11% in 2009 in inflation-adjusted terms, according to the AIA Consensus Construction Forecast.
One bright note is that prices have dropped for key construction commodities such as steel after a volatile year. And President Obama's stimulus plan is expected to include significant infrastructure spending, which may help cushion the impact of the economic downturn and create opportunities, primarily for Federal buildings and schools.
This construction outlook reviews the year's topline construction numbers, examines the directions that leading construction and electrical industry indicators are pointing, and provides a summary of the AIA Consensus Construction Forecast for 2009.