Construction Up Slightly in Second Quarter

FMI reports there are signs that the economy is recovering in the second quarter 2011 – even for contractors – but you have to look hard to see them. The stock market has taken on a more bullish trend since the bottom of the recession, but that bull has yet to visit Main Street, which is struggling to fix the potholes, not to mention the infrastructure buried beneath the streets.

The costs of construction materials have been rising faster than the slow increase in construction activity would suggest. Recently, commodities investors woke up to the idea that the recovery may once again be delayed. Their concerns are justified when one considers the uncertainties in the news, including a slowdown in GDP growth to just 1.8% after a solid fourth quarter pace of 3.1%. 

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Cement Consumption Slump Expected Next Two Years

While the economic recession is over and economic growth is strengthening, the construction recession may not run its course for another 18 months, hindering an improvement in cement consumption for the next two years according to the most recent economic forecast from the Portland Cement Association (PCA).

In 2011, PCA anticipates marginal growth with a two percent increase in consumption. However, this will increase to 8.5 percent in 2012 and swell to 18.5 percent in 2013 when all construction sectors—residential, commercial and public—will be on the upswing.

“The economy clearly has entered a stage of self-sustaining growth, but impediments to a construction recovery are so large that it will 

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Commercial Construction Up in 2Q

In spite of adjustments made to accommodate the rising cost of materials, the Nonresidential Construction Index (NRCI) moved up 1.4 points to 58.7 for the second quarter. For the fifth quarter in a row, the Index has remained at least slightly in positive territory. The slow, uneven recovery of nonresidential construction mirrors the mixed signals from the national economy, where consumer spending begins to improve just as gas prices skyrocket, and 

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Construction Material Costs Climb 0.9% in January

Construction material costs rose in January, while the amount contractors charge for projects remained flat. Price trends are cutting into already tight bottom lines and undermining chances for an industry-wide recovery in 2011.

Construction material prices jumped 0.9% in January, and nearly 5% overall during the past year, while finished building price indexes barely changed during the same timeframe. Construction costs also outstripped the producer price index for 

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