FMI's Construction Outlook Predicts Slowdown in 2009

June 18, 2008 • FMI's Second Quarter 2008 Construction Outlook is now available. The Construction Outlook, a quarterly construction market forecast developed by Raleigh, N.C.-based FMI's Research Services Group, indicates construction for 2008 remains much the same, but the outlook for 2009 has been revised down slightly because a downturn in nonresidential construction usually lags a slowdown in the general economy.

Recently released economic indicators are somewhat mixed. Housing, credit tightening, consumer spending and inflation continue to hinder the economy. While the general economy begins to stabilize somewhat, nonresidential construction is expected to falter late in 2008 and into 2009.

“The Fed continues cutting rates to stimulate the economy, but inflation is becoming a threat and a pause is likely,” said Heather Jones, construction economist for FMI's Research Services.

FMI predicts that total construction in 2008 and 2009 will be down 4 percent and 1 percent based upon large decreases in residential construction that will not be offset by gains in nonresidential and nonbuilding construction. The decline in 2009 will be driven by a decrease in nonresidential construction for the first time since 2003.

Historical information in FMI's Construction Outlook is based on building permits and construction put in place data as provided by the U.S. Commerce Department. Forecasts are based on econometric and demographic relationships developed by FMI, on information from specific projects gathered from trade resources and on FMI's analysis and interpretation of current and expected social and economic conditions.

Click here to read the report.