Signs of life in construction forecast
Construction usually follows employment, and employment will improve throughout the rest of 2010, said Bill Greiner, president and CEO of Scout Investment Advisors, Kansas City, Mo. Greiner spoke March 28 during the BEC Conference at the Paris Las Vegas, hosted by the Glass Association of North America, Topeka, Kan.
Unemployment was at 9.69 percent at the end of February, Greiner said, and it will “come down much more aggressively. … We’ve probably seen the peak of unemployment for this cycle.” Greiner said he expects unemployment to end the year at 8.5 percent. Lower unemployment will lead to an increase in consumer sentiment, and an uptick in housing, he said. Housing should be up 190,000 units compared to 2009.
While residential construction looks to be on its way back up, nonresidential construction is lingering at or near the bottom. “We’re starting to see things normalize in residential. Nonresidential, as of January, looks like it’s flat on its back. But residential is trying to get its feet underneath it,” Greiner said.
Commercial real estate vacancies have moved up from the boom years, but are fairly normalized historically. The lending picture is also improving for the commercial market, as tightening standards from banks are decreasing, and demand for commercial real estate loans is increasing, he said. “It’s still negative, but not nearly as negative.”
The Architectural Billings Index, from the American Institute of Architects, Washington, D.C., is also showing improvement. “We’re seeing a significant push on the upside for architectural billings. We may see a push on the upside [for nonresidential spending] in the next 9 months,” Greiner said.