Engineering Inc. - January/February 2004 - 8

MARKET WA T C H Construction Pace to Quicken in 2004 By Joe Salimando F
What Could Go Wrong? lat, for now. But just wait a conference, tried to
pop the PCA's focus is cement con- while. That's the forecast balloon. In
three construction forecast- sumption, and thus includes for the
construction market Zandi's argument: With ing conferences recently held,
road building. in 2004 even as the economic mortgage rates rising, the
stim- optimism abounded every time Robert Murray says total recovery
continues. ulus to the economy provided an economist saw a micro-
construction starts were up 1 Economists believe the recov- by housing
starts and refinanc- percent in 2002 over 2001 phone. Example: Dr. Joel L.
ery has just begun, and expect ings will disappear. If business and will
have risen another 1 Prakken, chair of Macroeco- construction to hit its
stride in spending does not increase percent when 2003's figures are nomic
Advisors, LLC, titled a 2004 moving from a walk to noticeably, we could
lapse back computed. For 2004, another presentation Prepare for a run soon
after, and resulting into economic stagnation or 1 percent gain is expected
see Liftoff! in a strong market in 2005. even recession . the accompanying
table In such a positive environ- Robert Murray, vice presi- In the end,
Zandi's forecast below . ment and with an eye to the dent and chief
economist for was not negative. His presenta- NAHB's David Seiders sees
past few years it might be McGraw-Hill Construction's tion detailed likely
local pock- 1,786,000 housing starts for worthwhile to consider what Dodge
division, predicts ets of strength in a recovery's 2003, and 1,700,000 for
next might go wrong. If the housing that assuming the recovery early and
late stages. But given year. The latter represents a boom recedes sharply,
for is not interrupted total con- the rampant optimism, he said decline of
nearly 5 percent, but example, major problems could struction by 2005 and
2006 he felt compelled to present a for Seiders, it remains a posi-
result. will see stronger growth in the counterpoint. tive indicator,
especially con- As David Seiders, vice presi- range of 2 percent to 5
percent sidering the elevated level dent and chief economist at Constr
uction Analysts' annually. housing has achieved. NAHB noted, the
residential Predictions for 2004: Also, FMI forecasts a big And, as noted
previously in market has been the best mar- ket in construction and the
best Engineering Inc., FMI Corp. Edward Sullivan, chief econo- increase in
total construction single market in the entire U.S. recently projected $854
billion mist for the Portland Cement for 2005. Estimates for 2005 economy
perhaps the best on in 2004 construction, a figure Association PCA ,
estimates from the National Association the whole planet. based on FMI's
2003 estimate construction was down 1 per- of Home Builders NAHB But Mark
Zandi of Economy and actual 2001 and 2002 cent in 2003 and will be up
conference suggest another .com, a speaker at NAHB's figures. about 1
percent next year. high-level housing start year. Construction Forecast
Historical Data for Selected Years dollars in billions 1998 2000 2002
2003E 2004F 2004/2003 Total Construction $405.6 $473.1 $501.7 $505.6
$508.9 + 1% Single-Family Housing $152.3 $177.0 $214.2 $230.5 $226.0 - 2%
Public Works $67.9 $77.8 $87.6 $78.9 $80.5 + 2% Income Properties* $101.6
$112.3 $92.9 $92.9 $100.9 + 9% Institutional Buildings $68.3 $83.6 $89.7
$86.6 $88.1 - 1% Manufacturing Buildings $12.1 $8.9 $5.3 $5.5 $6.0 + 9%
Source: McGraw-Hill Construction E = estimated. F = forecast. * Income
Properties = hotels/motels, multifamily dwelling units, office buildings,
retail, and more. 8 ENGINEERING INC. J a n u a r y l February 2004
Engineering Inc. - January/February 2004

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