Construction Forecast Cautiously Optimistic

The construction economy will continue to slip the rest of the year before turning toward recovery in 2003, construction economist Bill Toal reported recently at the 7th Annual CMD/CSI CEO Breakfast in Las Vegas.

Toal, formerly of the Portland Cement Association, forecasted a 1.6% drop in total construction for the year with an expected increase of 1.4% in 2003.

Toal indicated that while some sectors remain weak, the economy is now showing signs of improve-ment. Some of the more apparent signs of recovery include an increase in industrial production, and re-cord low inflation and interest rates. These low interest rates have been keeping consumer spending strong.

While industrial production slipped in the beginning of the year, it has recently showed signs of im-provement. The corporate office market, however, is still declining. Office vacancy rates have increased from 7% last year to more than 15% due to previously overbuilt commercial and industrial real estate. While the job loss rate has declined, layoffs and downsizing continue to contribute to the imbalance between available office space and corporate need for that space.

Airport and school construction will remain strong through the final two quarters of the year, as will public works, Toal reported.

CMD will hold its annual North American Construction Forecast conference in Washington, D.C. on Oct. 16. For more information visit, www.nacf.com .

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