The slowdown in single-family housing has gained a lot of attention, but activity in nearly every other construction segment is helping to keep builders, subcontractors and materials suppliers busy.
“The economy today appears to have many sources of strength that will support an expansion of construction (other than housing) in 2007 and beyond,” Ken Simonson, chief economist with the Associated General Contractors of America (AGC), told attendees of the C&D World Exhibition and Conference in mid-January.
Simonson remarked that he is “quite optimistic about the outlook for non-residential construction,” but added that the “outlook for residential looks a lot colder.”
If 2007 shakes out that way, it will be the continuation of a pattern that started in 2006, according to Simonson.
The AGC economist described the home building market as in “free fall,” with new housing starts down 11 percent in November 2006 compared to November of 2005.
While for homebuilding contractors this has caused a noticeable slump, subcontractors and recyclers who serve the overall construction market can shift their attention to the commercial and highway construction segments.
The combined non-residential construction segments in November of 2006 showed a 16 percent gain in private spending and an 11 percent gain in public works spending, “almost perfectly offsetting” the residential slump, according to Simonson.
Simonson characterized current economic indicators as positive, including moderate GDP growth, low unemployment and an inflation rate that has “hit the sweet spot” at 1 to 2 percent as measured by the Consumer Price Index.
For demolition and construction contractors and their suppliers, several non-residential segments are providing a home for their services. The hotel, hospital, power plant and highway segments should all continue to boom in 2007, according to Simonson’s forecast.
Even in the sluggish residential segment, not all the news is bad. “Already, a number of projects designed or started as condos have been repositioned for the rental market, and buildings designed for rentals are going up after a long hiatus,” noted Simonson.
C&D World, the annual conference of the Construction Materials Recycling Association (CMRA), took place in