Construction industry prepares for cutbacksThe construction industry is preparing for significant reductions in commercial and public works projects, which could result in the industry’s deepest and longest contraction in recent years, according to The Wall Street Journal.
A report released yesterday by McGraw-Hill Construction estimates the value of new construction projects will drop to $515 billion next year. This is a 7 percent decrease from this year and 25 percent less than its peak of $690 billion in 2006.
Construction of hotels, office buildings, warehouses and factories—which had remained relatively strong in recent years—is expected to experience cutbacks. States are suffering lower tax revenue, and financing for commercial projects has become too expensive or difficult to secure. Although most construction downturns last one or two years, the current construction downturn will be in its third year for all property types and fourth year for single-family homes.
"It's the most difficult environment for construction since the early 1990s," says Robert Murray, vice president for economic affairs, McGraw-Hill Construction. "The big story for 2009 will be how the weakening construction market will spread to nonresidential building and public works."
Nonresidential construction is expected to decrease 10 percent next year to $220 billion, and 12 percent less nonresidential space will be built than in 2008.
Date : 10/24/2008