Spending growth slows in non-residential building market
Non-residential construction activity continues at a high level but has not expanded since last fall, after adjusting for project cost inflation, according to Reed Construction Data. However five markets continue to expand—mostly in the plants, utilities, and hotels sectors.
Non-residential construction activity continues at a high level, but has not expanded since last fall, after adjusting for project cost inflation, according to Reed Construction Data . However five markets continue to expand. The growth in construction spending from November to June is 19% for manufacturing, 17% for power (electric and gas utilities plus energy industries), 15% for water (entirely new treatment plants), 15% for hotels (mostly destination hotels), and 8% for public safety buildings.
The slowdown is evident in the construction starts totals from Reed Construction Data. The YTD (July) value of starts was down 6% compared to the first seven months of last year. July starts were relatively weak after strong totals in May and June. Only a few small markets have clearly expanded: government offices (100%), libraries and museums (43%), dams and marine (22%), parking garages (21%), and airports (18%).
Among major markets the largest decline is for commercial buildings (mainly retail buildings) where reduced returns on investment prospects quickly caused project deferrals and cancellations. This slowdown is in response to the recession in the domestic economy and will quickly reverse when the recession end by year end. Then renewed, if modest, expansion in the commercial sector will resume.
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Annual Salary Survey
Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.
There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.
But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.
Read more: 2015 Salary Survey