The Building Tradesman Newspaper

Friday, November 22, 2002

Construction's crystal ball: Activity to decline slightly in 2003

By The Building Tradesman

The first set of prognosticators have weighed in with predictions for the nation's construction activity in the new year - and the news is pretty good.

The Dodge Division of McGraw-Hill expects overall construction awards to decline 1 percent next year. The good news is that still amounts to $495.1 billion worth of U.S. construction activity, which is equal to the amount spent in 2001, the peak year of the construction expansion that dates back to 1993.

"In terms of rates of growth, it is not that positive of a story," said Robert A. Murray, vice president of economic affairs for Dodge. "But overall construction activity is still moving at a reasonably decent clip. We are not going to see a replay of the early '80s and '90s," when contractors were scrambling to survive, he said.

Dodge expects the office building market will decline 3 percent in 2003, after dropping 21 percent this year. Hotel and commercial building markets are expected to hit bottom next year, with no rebound in sight. Single family housing, which has averaged nearly 8 percent annual growth since 1999, is expected to be flat. Public works projects are expected to decline by 3 percent next year. Institutional building is expected to rise by 1 percent. Industrial work has fallen in the U.S. for the last five years, but is expected to go up 6 percent next year.

Dodge also forecast a 7.4% increase in apartment building construction and a 2.9% hike in hospital work next year.

The U.S. Commerce Dept. echoed the Dodge forecast, calling for total U.S. construction to drop 1.2 percent next year.

None of the reports were specific to Michigan, but anecdotal reports from local building trades unions around the state indicate there has been a gradual but significant decline in construction activity over the last 18 months.