Expansion Ahead for Most Construction Sectors
The U.S. economy is expected to expand more slowly in 2005 than it did in 2004, but the nonresidential construction market will continue to grow at an above average pace, according the March, 2005 Construction Forecast Monthly from Reed Construction Data. If all goes well, say the researchers, the Gross Domestic Product (GDP) growth rate will be slightly faster than the sustainable long-term growth rate—the pace that keeps the unemployment rate stable and the inflation rate in check. The predictions for the latter are from just under 3% to slightly more than 4%.
Reed researchers predict 10% to 11% economic growth in the 2005-2007 period, which should be enough to ensure strong growth in the nonresidential construction and engineering markets. However, they point out that new residential construction is likely to be the only major sector of the economy that will contribute to growth in 2005-2006.
Moreover, say the researchers, there don’t appear to be any imbalances in the U.S. economy that will shut down the economic expansion in the 2005-2006 period.
Spare building capacity continues to shrink and inventory investment will add fuel to growth in nonresidential building construction.
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