USA Construction Market Forecast for 2015

US Construction Market Forecast for 2015.

1. Positive Outlook for US construction market predicted
2. Office & retail commercial will be the driving sectors of 2015 US construction market
3. More loans and bonds available for US Construction Market
4. Appendix

1. Positive Outlook for US construction market predicted

After a relatively healthy recovery in 2013 and especially in 2014, Building Radar (in short: BR; formerly known as Global Data Machine) predicts a very positive future for the 2015 construction market in the USA. As Building Radar researchers have estimated the total US construction market will grow by 9.8% from 2014. According to BR’s Chief Analyst Valentin Weidl “the US market shows a lot of progression and will reach around $615 billion in 2015.” The key drivers for this growth are the balanced increases within the spending for the public safety sector that will grow by 4.2% from the previous year’s 0.1% decline. A key factor that determines this growth will be the federal deficit and whether or not republicans and democrats can find a better compromise then in the previous years. In addition the religious construction sector looks to recover from a previous decline by 0.2% to a steady growth of 1.1%.

2. Office & retail commercial will be the driving sectors of 2015 US construction market

Furthermore BR predicts strong double-digit growth rates within the office and retail / other commercial sectors with 14.2% and 17.4% respectively. Whilst the current low interest rates are one of the main factors driving such a rapid increase compared to BR’s 2014 prediction, BR still sees a greater problem with the US construction development within the retail sector due to the decrease in average spending per person. Nonetheless Mr. Weidl “(we) believe that these two sectors will be the driving sectors for 2015.” Other economic analysts have put a greater emphasis on the hotel sector though we here at BR estimate the hotel sector to have a slight decline in spending by 3.4% to “only” 9.8% compared to its 2014 growth rate of 13.2% totaling $16.53 billion. In addition Building Radar predicts that the total growth rate within the commercial sector will decline by 1.5% to around 7.8%.

3. More loans and bonds available for US Construction Market

Looking at the nonresidential sector we predict a spending increase of about 9.1% due to easier and more readily available bank loans. Amusement and recreational sector figures are estimated to drop to 6.3% from this previous year’s 8.9%. A refreshing growth rate will be seen within the educational 4.5%, institutional 5.3% and health 5.6% sectors. These growth rates are largely affected by the positive effect of more construction bond measures getting passed as well as the need for more schools. The industrial sector will also see a moderate growth at around 7.6% totaling $55.21 billion, though BR was surprised by the actual growth in the past couple of years.

2014	Growth (in %)	2015	Growth (in %, estimated)
Nonresidential Total	4,70	Nonresidential Total	9,10
Commercial Total	9,30	Commercial Total	7,80
Office	10,10	Office	14,20
Retail & Other Commercial	9,90	Retail & Other Commercial	17,40
Hotel	13,20	Hotel	9,80
Industrial Total	5,80	Industrial Total	7,60
Institutional Total	4,10	Institutional Total	5,30
Health	2,70	Health	5,60
Education	3,00	Education	4,50
Religious	-0,20	Religious	1,10
Public Safety	-0,10	Public Safety	4,20
Amusement & Recreation	8,90	Amusement & Recreation	6,30

Development Of The US Construction Industry by Sector (in %)

US construction spending by sector (in US$B)

What still hasn’t recovered are the employment rates of the past, as the recession had pushed millions of people out of the industry. Currently the construction industry employs around 20 million people with an unemployment rate in October 2014 of 6.4%. BR estimates that in 2015 the construction industry will employ around 20.5-21 million people whilst pushing unemployment rates to around 6.2%.

A comparison in billions of USD spent per sector from the top 7 industry forecasters including BR’s findings can be found hereafter.

Spending Per Sector 2013 in billion $
	Average of all 8 companies listed	Building Radar	McGraw Hill	IHS-Global Insight	Moodys Economy	FMI	Reed Construction Data	Association of builders and contractors	Well Fargo Securities
Nonresidential Total	308,20	301,80	295,70	308,20	295,20	360,00	296,80	308,30	299,60
Commercial Total	104,50	100,60	100,80	82,20	88,90	159,80	100,30	105,70	97,40
Office	16,20	36,70	38,20	29,90	29,80	38,70	37,90	39,70	38,40
Retail & Other Commercial	53,60	49,30	48,50	38,80	38,50	107,60	48,40	50,90	47,00
Hotel	13,60	13,30	14,10	13,50	13,60	13,40	14,00	15,10	12,00
Industrial Total	48,20	48,50	48,70	46,00	48,30	48,70	48,60	49,80	47,00
Institutional Total	153,30	154,90	146,20	164,70	153,10	151,50	147,80	152,80	155,10
Health	37,50	40,10	40,60	41,40	11,10	41,70	41,10	42,10	41,90
Education	80,60	79,40	78,90	80,00	79,30	81,30	79,50	82,00	84,30
Religious	3,50	3,50	3,40	3,50	–	3,40	3,50	3,60	3,70
Public Safety	9,60	9,30	9,20	–	9,20	9,80	9,40	9,80	10,70
Amusement & Recreation	14,90	15,10	14,10	14,00	15,80	15,30	14,40	15,30	15,10

Spending Per Sector 2014 in billion $

Spending Per Sector 2014 in billion $
	Average of all 8 companies listed	Building Radar	McGraw Hill	IHS-Global Insight	Moodys Economy	FMI	Reed Construction Data	Association of builders and contractors	Well Fargo Securities
Nonresidential Total	326,08	315,98	311,67	336,55	309,66	376,20	317,87	323,72	312,48
Commercial Total	115,26	109,96	116,83	94,94	98,59	167,47	109,63	113,20	105,68
Office	17,69	40,41	43,24	34,41	33,26	39,86	41,16	42,60	40,44
Retail & Other Commercial	59,23	54,18	57,08	44,74	41,62	112,87	52,56	54,31	52,88
Hotel	15,38	15,06	16,45	15,80	16,74	14,70	15,90	16,35	12,38
Industrial Total	51,96	51,31	51,67	48,67	55,79	51,87	53,41	51,79	50,06
Institutional Total	158,51	161,25	143,28	176,72	161,52	156,95	154,75	158,76	156,50
Health	39,45	41,18	40,19	45,83	11,70	43,33	45,54	43,32	43,37
Education	82,86	81,78	76,93	87,76	82,79	84,31	80,22	84,95	84,30
Religious	3,44	3,49	3,40	3,24	–	3,49	3,35	3,77	3,49
Public Safety	9,58	9,29	7,83	–	9,33	10,09	9,87	10,19	10,72
Amusement & Recreation	16,38	16,44	14,95	14,77	17,96	15,70	15,85	16,42	15,28

Spending Per Sector 2015 in billion $

Spending Per Sector 2015 in billion $
	Average of all 8 companies listed	Building Radar	McGraw Hill	IHS-Global Insight	Moodys Economy	FMI	Reed Construction Data	Association of builders and contractors	Well Fargo Securities
Nonresidential Total	352,16	344,74	346,57	372,90	329,79	398,40	344,26	341,20	338,11
Commercial Total	127,71	118,53	139,49	109,09	108,94	178,02	119,28	119,54	116,56
Office	19,60	46,14	51,42	40,68	38,74	41,77	43,59	45,15	42,66
Retail & Other Commercial	66,04	63,61	69,19	50,64	45,45	120,10	57,82	57,24	60,91
Hotel	16,80	16,53	18,79	17,72	17,71	16,11	17,84	17,19	13,00
Industrial Total	56,48	55,21	56,17	53,00	61,42	55,34	59,34	54,74	55,06
Institutional Total	168,50	169,80	151,01	193,51	170,57	164,96	165,73	166,86	166,36
Health	42,53	43,49	42,53	51,01	12,09	45,71	50,87	45,44	48,57
Education	87,66	85,46	80,62	98,47	87,59	88,52	83,42	89,03	87,59
Religious	3,49	3,53	3,58	3,03	–	3,60	3,36	3,95	3,53
Public Safety	9,88	9,68	7,43	–	9,77	10,47	10,63	10,62	11,09
Amusement & Recreation	17,60	17,48	16,90	–	19,02	16,69	17,55	17,52	16,20