McGraw-Hill Construction has released its 2008 Construction Outlook, forecasting a drop in overall U.S. construction spending for next year, fueled by tighter lending conditions and weaker job growth.
The report suggests that the level of construction starts is expected to decline two percent, to $614 billion in 2008, following an eight percent decline predicted for 2007.
“The credit crunch that emerged at mid-2007 continues to be a major concern for construction and the overall economy," said Robert A. Murray, Vice President, Economic Affairs, McGraw-Hill Construction.
"As a result, we're now predicting downturns in the previously resilient multifamily and commercial segments, as well as continued weakness in single-family home construction."
Rise and Fall
The outlook predicts downturns in key construction areas, including manufacturing buildings which will retreat eleven percent after a 40 percent surge in 2007.
Single-family housing will weaken further, given the large inventory of unsold homes and diminished loan availability to homebuyers as well as multifamily housing following steep declines in 2007.
Commercial building will also slip six percent in dollar volume and eleven feet in square feet.
Public works construction will move up three percent, following the five percent gain in 2007, whilst institutional buildings will rise four percent in dollar volume, while square footage rising one percent.
Electric utilities will see another modest decline in percentage terms, but essentially this project type is holding at the enhanced level achieved in 2006.
School construction is expected to strengthen again after its 2007 pause, and transportation terminals are also expected to grow.
Other institutional structure types, including healthcare facilities, will see a modest loss.
The 2008 Construction Outlook was presented at the McGraw-Hill Construction Outlook Executive Conference in Washington, DC.
October 25 2007
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