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By PBN Staff
PROVIDENCE – After ending 2012 with a 10 percent year-over-year increase in construction spending, spending is expected to grow more than 7 percent in 2013, the Gilbane Building Co. said in its spring 2013 edition of its annual construction-industry economic report.
The report, “Construction Economics - Market Conditions in Construction,” is based on an array of economic data, construction starts and material cost trends. According to Gilbane, the data is the most positive the company has seen in recent years.
“We are in a growth period that by all leading indicators seems here to stay. From 2006 to 2010, as work declined, we saw the largest decline of margins in recent history. In 2011, that trend began to reverse slightly,” Ed Zarenski, the report’s author and a 40-year veteran of the construction industry, said in a statement. “I expect the positive growth to continue.”
The monthly rate of construction spending rose 20 percent in 24 months and increased in 18 of the last 24 months, said the report, which called these statistics “a good leading indicator for new construction work in [the third and fourth quarters of 2013].”
Although construction spending is expected to increase more than 7 percent in 2013, the report said this would be driven almost entirely by a 20 percent increase in residential spending.
The report predicted that public spending will decline in the upcoming year while private spending will “lead the charge.” Gilbane said it expected spending growth of 8.3 percent for commercial markets, 5.2 percent for office and 2.3 percent for health care.
“As spending continues to increase, even moderate growth in activity will allow contractors to pass along more material costs and increase margins,” said the report, adding: “When activity picks up in all sectors, escalation will begin to advance rapidly.”
During the last five months, construction jobs grew by 150,000. “Just to meet the needs of the predicted residential building expansion, the workforce needs to grow by 750,000 in the next two years, faster than the entire construction workforce has ever grown in history,” said Gilbane.
To view the full report, visit: www.gilbaneco.com.