FMI’s Construction Outlook – Second Quarter 2008
FMI’s
FMI’s Construction Market Forecasts
BENEFITS
A Construction Market Forecast from
FMI’s Research Services Group can:
• Supply the market-oriented, economy-driven
dimension essential for preparing, implementing
and monitoring strategic plans.
• Be a significant aid in defining, targeting,
implementing and monitoring other critical
corporate decisions, such as long and short-term
sales goals, or redirecting resources; for example,
on a geographic or a product-line basis.
• Provide the basis for estimating sub-markets.
• Provide the basis for comparing performance
among markets.
• Provide the basis for identifying activities that are
beneficial or detrimental to performance.
FEATURES
Each Standard Construction Market Forecast:
• Details construction put in place in three
residential building, 11 nonresidential building
and five nonbuilding structure categories. It
covers the current year, eight previous years and
five forecasted years. It is available for any county
in the U.S., or any combination of counties,
metropolitan statistical areas, states, regions, etc.
• Includes both construction values and annual
percentage changes. Delivery time depends on
the size of the request but is usually only a few
days. It can be delivered in printed or electronic
form, in most major text or spreadsheet formats.
Graphs can be provided at additional cost.
BASIS
• Historical information in FMI’s standard
Construction Market Forecast is based on
building permits and construction put in
place data as provided by the U.S. Commerce
Department. Forecasts are based on econometric
and demographic relationships developed by
FMI, on information from specific projects
gathered from trade sources, and on FMI’s
analysis and interpretation of current and
expected social and economic conditions.
OTHER REPORTS
• Reports on state and federally financed
highway construction are available for most
counties or combinations of counties.
• Custom reports on a wide variety of construction-
related topics can be prepared by FMI.
• Reports are based on multiple sources and are
appropriate for preliminary analytical and
planning purposes, but contain little or no direct
observation of the area described and are not
guaranteed to be accurate by FMI.
For more information, call
919.785.9335
FMI’s Construction Outlook – Second Quarter 2008
About FMI
Founded in 1953 by Dr. Emol A. Fails, FMI provides management consulting and investment
Construction Outlook
banking for the worldwide construction industry.
Second Quarter 2008 Report
FMI, management consultants and investment bankers to the building and construction industry,
delivers innovative solutions to contractors, architects and engineers, construction materials producers, Director of The Conference Board
manufacturers and suppliers of building products and construction equipment, private owners,
residential builders, utilities, government agencies, surety companies and trade associations. “The Fed continues cutting rates to Consumer Research Center. “This
continued weakening suggests that not
only has the feeble level of growth in
FMI’s management consulting practice provides a wide array of services, including strategy, training stimulate the economy, but inflation is the first quarter spilled over into the
second quarter, but that economic
and talent development, leadership and organizational development, market research, project
execution, business development and compensation consulting. FMI’s investment banking practice becoming a threat and a pause is likely.” conditions may have slowed even
further. And, not only are lackluster
provides merger and acquisition advisory services, capital placement and financial advisory services. business and job conditions eroding
confidence, but rising gasoline prices
The outlook for 2008 remains much The employment situation appears to are undoubtedly heightening concerns.
About FMI’s Research Services Group the same. However, the outlook for
2009 has been revised down slightly
be holding fairly steady; however, it
can change quickly. Employment and
Consumers’ inflation expectations
continue to rise and this measure now
because a downturn in nonresidential the unemployment rate in April were matches the all-time high reached in
As the construction industry becomes increasingly competitive, market intelligence becomes an important tool
construction usually lags a slow essentially unchanged. The employment the aftermath of Hurricane Katrina.
for the building industry. A more complete understanding of the market, market trends, customer perceptions, down in the general economy. The rate remained at 5.0%. Employment The percentage of respondents
buying practices, competitor profiles and other market influencers will enhance craft labor studies. economic indicators released over decreased by 20,000 in April to 146.3 intending to take a vacation over the
the past three months are somewhat million following job losses that totaled next six months has fallen to a 30-year
Since 1953, FMI has provided consulting and training services specialized for the construction industry. FMI’s mixed. Housing remains a drag on the 240,000 in the first three months of low, another sign of consumers turning
market research includes both secondary and primary research designed to meet clients’ specific needs. Both economy although a few early signs the year. Construction employment more cost conscious. Looking ahead,
point to the bottom possibly nearing. decreased by 61,000 in April and has consumers’ outlook for the economy,
types of research are used to provide accurate assessments in a timely, efficient and concise manner for clients.
Credit tightening is still an issue, but fallen by 457,000 since its peak in the job market and their income
Typical project work performed includes customer buying practices, competitive analyses, market-size also shows some signs of potential September 2006. prospects remains quite pessimistic and
modeling, market forecasts and trends, channel performance analyses, customer satisfaction surveys and sales easing. Consumer spending, while still little changed from last month. Or,
performance evaluations. positive, continues to slow, and the The Conference Board’s Consumer in other words, the glass remains half
employment situation appears to be Confidence Index, which declined empty.” Credit tightening remains an
steadying, albeit at a lower level. The sharply in March, fell further in April. area of concern for the Federal Open
Market Committee, or the Fed. The
Fed continues cutting rates to stimulate The Index is now 62.3, down from
the economy, but inflation is becoming 65.9 in March. The Expectations Federal Reserve has lowered the target
a threat and a pause is likely. While the Index rose slightly to 50.1 from federal funds rate from 5.25% in
general economy might be beginning 49.4. The Present Situation Index September to 2.0% at the end of April.
Raleigh Denver Tampa Phoenix
to stabilize somewhat, nonresidential decreased to 80.7 from 90.6. The The Fed stated, “Recent information
5171 Glenwood Avenue 55 Madison Street 5301 W. Cypress Street 5080 N. 40th Street construction is expected to falter late in Consumer Confidence Index is viewed indicates that economic activity
2008 and into 2009. as a leading indicator for consumer remains weak. Household and business
Suite 200 Suite 410 Suite 201 Suite 245
spending, which drives two-thirds spending has been subdued, and labor
Raleigh, NC 27612 Denver, CO 80206 Tampa, FL 33607 Phoenix, AZ 85018 markets have softened further. Financial
Real GDP growth in the first quarter of the U.S. economy. Decreasing
P 919.787.8400 P 303.377.4740 P 813.636.1364 T 602.381.8108 was 0.9%, according to preliminary consumer confidence has just begun markets remain under considerable
F 919.785.9320 F 303.377.3535 F 813.636.9601 F 602.381.8228
estimates released by the Bureau of
Economic Analysis. Fourth quarter
to translate into a slow down in
consumer spending.
stress, and tight credit conditions and
the deepening housing contraction are
GDP grew at a dismal 0.6% according
to final estimates. Growth is expected “This month’s decline in Consumer
likely to weigh on economic growth
over the next few quarters.” The Federal
to remain slow in 2008 before picking Confidence was the result of yet Open Market Committee (FOMC)
up slightly in 2009. another sharp decline in the Present expects inflation to moderate in coming
Situation Index,” says Lynn Franco, quarters, reflecting a projected leveling-
FMI’s Construction Outlook – Second Quarter 2008 FMI’s Construction Outlook – Second Quarter 2008

out of energy and other commodity Public safety construction will remain
prices and an easing of pressures on fairly strong, increasing 8% in 2008 Construction Put in Place
resource utilization. Still, uncertainty to almost $10.7 billion and increasing Estimated for The United States
about the inflation outlook remains another 2% in 2009 to $10.9 billion. Millions of Current Dollars
The current highway bill, SAFETEA- 2nd Quarter 2008
high. The Fed will continue to monitor
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
developments closely. They believe the LU, expires in 2009. FMI predicts an RESIDENTIAL BUILDINGS
substantial easing of monetary policy to extension of this bill rather than a new Single Family 201,053 225,601 237,867 251,063 265,889 310,575 377,557 433,510 415,997 303,471 245,812 240,896 252,940 273,176 292,298
date, combined with ongoing measures authorization until the elections are Multi Family 29,152 32,289 32,607 35,610 38,133 40,200 45,298 52,598 58,791 54,735 49,262 47,784 49,217 50,694 54,242
Improvements* 91,371 100,072 109,908 109,798 123,154 130,381 147,480 160,845 172,628 173,122 169,660 176,446 185,268 198,237 208,149
to foster market liquidity, should over, despite the dire predictions that
Total Residential 321,576 357,963 380,382 396,471 427,176 481,156 570,335 646,953 647,416 531,328 464,733 465,125 487,426 522,106 554,689
help promote moderate growth over the Highway Trust Fund will shortly NONRESIDENTIAL BUILDINGS
time and mitigate risks to economic incur a deficit. Congested highways Lodging 15,333 16,512 16,850 15,486 10,869 10,712 12,363 12,840 18,047 29,922 31,118 26,139 27,185 28,816 31,121
and corroding bridges are clearly a Office 47,426 51,977 61,001 59,495 44,277 39,418 42,404 45,763 54,644 65,359 63,399 53,889 56,044 58,847 62,377
activity. The Committee will continue
Commercial 59,116 63,329 67,873 68,506 62,520 61,529 67,057 70,242 75,518 85,398 81,128 68,959 71,027 75,999 81,319
to monitor economic and financial problem for our nation. However, Health Care 21,887 22,797 24,615 24,776 27,139 29,329 32,184 34,430 39,525 45,037 48,190 49,153 53,577 60,006 67,207
developments and will act as needed to funding to correct these problems is Educational 46,421 52,456 58,848 64,960 73,862 74,316 74,250 79,687 85,992 98,441 102,379 104,427 109,648 119,516 130,273
promote sustainable economic growth an issue. Escalating highway and street Heather Jones Religious 6,662 7,433 8,071 8,806 8,339 8,569 8,159 7,735 7,700 7,538 6,784 5,970 6,030 6,211 6,459
Public Safety 9,631 9,762 10,049 9,558 7,827 7,161 7,019 7,314 7,806 9,866 10,655 10,868 11,520 12,441 12,939
and price stability. construction costs are only adding Construction Economist Amusement and Recreation 17,072 19,525 20,168 20,207 17,328 16,847 16,695 15,236 18,248 20,555 20,144 18,331 18,881 20,014 21,014
pressure, and there are now new doubts Transportation 19,228 19,525 22,887 24,409 25,781 24,710 25,059 25,052 27,038 31,305 33,810 34,486 37,590 40,597 43,032
CPI is the most widely used measure as to whether public-private partnerships Heather Jones is a construction Communication 12,636 18,617 18,958 20,173 18,457 14,550 15,546 18,906 21,653 26,200 27,772 28,328 30,027 31,529 32,790
Manufacturing 41,015 33,107 32,184 30,364 22,926 21,508 23,808 30,040 34,461 37,646 40,281 41,892 43,568 45,311 47,576
of inflation and has remained low by (PPP) are the answer to our problems. economist in the Research Services
Total Nonresidential Buildings 296,427 315,041 341,503 346,739 319,325 308,649 324,544 347,245 390,632 457,267 465,659 442,441 465,097 499,287 536,109
historical standards. Core CPI (CPI Therefore, FMI expects highway and Group. She is responsible for design, NONBUILDING STRUCTURES
minus volatile food and energy) rose street construction to increase 4% per Power 24,012 24,796 32,289 35,025 36,804 41,450 35,395 35,466 39,106 49,784 55,758 61,334 66,854 74,876 83,861
management and performance of Highway and Street 45,842 50,248 54,002 60,554 57,484 57,139 58,623 64,139 71,929 77,139 80,225 83,434 86,771 91,977 97,496
0.1% on a seasonally adjusted basis in year from 2008 to 2010. Sewage and Waste Disposal 9,027 10,071 10,949 12,006 16,237 16,581 17,929 19,867 22,990 24,603 25,342 26,355 27,936 29,613 31,093
primary and secondary market
April after increasing 0.3% in March. Water Supply 7,096 7,617 8,587 9,397 12,442 12,492 12,620 14,028 14,842 15,601 15,913 16,231 17,205 18,237 19,513
This translates into an increase of 1.8% Water is an important concern in research projects and related research Conservation and Development 2,798 3,076 3,362 3,967 3,621 3,935 4,044 4,453 5,322 5,690 5,918 6,154 6,524 6,850 7,124
our nation. Aging infrastructure, activities, including economic analysis Total Nonbuilding Structures 88,776 95,808 109,190 120,949 126,588 131,597 128,611 137,953 154,189 172,817 183,154 193,508 205,289 221,553 239,088
over the past four months, near the
Total Put in Place 706,779 768,811 831,075 864,159 873,090 921,403 1,023,487 1,132,149 1,192,238 1,161,412 1,113,546 1,101,074 1,157,812 1,242,946 1,329,886
Fed’s 2% target range. Rising general population growth and net migration and modeling, construction market *Improvements include additions, alterations and major replacements. It does not include maintenance and repairs.
inflation, plus some rapidly rising are fueling demand for new and forecasting and database management.
material costs could become perilous replacement construction. As the
Heather’s particular expertise is in the
for nonresidential construction. Steel population grows, more need is placed Construction Put in Place
prices continue to rise and copper on the systems. Net migration also areas of market sizing and modeling, Estimated for The United States
prices remain elevated. plays a role in where these needs are. competitive analysis, sales and market Change From Prior Year - Current Dollar Basis
2nd Quarter 2008
The Sunbelt will have the most need performance evaluations, buying 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Housing will be a drag on the economy for new and replacement construction practices and trends analysis. RESIDENTIAL BUILDINGS
again in 2008. It is not expected to begin due to general population growth and Single Family 13% 12% 5% 6% 6% 17% 22% 15% -4% -27% -19% -2% 5% 8% 7%
Multi Family 6% 11% 1% 9% 7% 5% 13% 16% 12% -7% -10% -3% 3% 3% 7%
recovering until 2009. All segments of positive net migration to this area. Improvements* -1% 10% 10% 0% 12% 6% 13% 9% 7% 0% -2% 4% 5% 7% 5%
the residential sector will remain down, The Rustbelt will require replacement Total Residential 8% 11% 6% 4% 8% 13% 19% 13% 0% -18% -13% 0% 5% 7% 6%
led by single family (-19%), followed by construction due to the age of its FMI Corporation NONRESIDENTIAL BUILDINGS
Lodging 14% 8% 2% -8% -30% -1% 15% 4% 41% 66% 4% -16% 4% 6% 8%
multi family (-10%) and then finishing systems, but will have less population 5171 Glenwood Office 19% 10% 17% -2% -26% -11% 8% 8% 19% 20% -3% -15% 4% 5% 6%
with improvements (-2%). than before. Terrorism threats will also Commercial 4% 7% 7% 1% -9% -2% 9% 5% 8% 13% -5% -15% 3% 7% 7%
add to the need for additional spending Suite 200 Health Care -2% 4% 8% 1% 10% 8% 10% 7% 15% 14% 7% 2% 9% 12% 12%
Educational 5% 13% 12% 10% 14% 1% 0% 7% 8% 14% 4% 2% 5% 9% 9%
Total construction in 2008 and 2009 for our water and sewer systems. Water Religious 14% 12% 9% 9% -5% 3% -5% -5% 0% -2% -10% -12% 1% 3% 4%
Raleigh, NC 27612
will be down 4% and 1%. The decline supply and sewage and waste disposal Public Safety 11% 1% 3% -5% -18% -9% -2% 4% 7% 26% 8% 2% 6% 8% 4%
in 2008 is based upon large decreases construction will increase by 2% and Amusement and Recreation 5% 14% 3% 0% -14% -3% -1% -9% 20% 13% -2% -9% 3% 6% 5%
Tel: 919.785.9335
Transportation 9% 2% 17% 7% 6% -4% 1% 0% 8% 16% 8% 2% 9% 8% 6%
in residential construction that will not 3% in 2008 and by 2% and 4% in Communication 0% 47% 2% 6% -9% -21% 7% 22% 15% 21% 6% 2% 6% 5% 4%
be offset by gains in nonresidential and 2009. These increases come despite a Fax: 919.785.9320 Manufacturing 7% -19% -3% -6% -24% -6% 11% 26% 15% 9% 7% 4% 4% 4% 5%
decrease in state and federal revenues. Total Nonresidential Buildings 7% 6% 8% 2% -8% -3% 5% 7% 12% 17% 2% -5% 5% 7% 7%
nonbuilding construction. The decline E-mail: hjones@fminet.com NONBUILDING STRUCTURES
in 2009 will be driven by a decrease in Power 20% 3% 30% 8% 5% 13% -15% 0% 10% 27% 12% 10% 9% 12% 12%
nonresidential construction for the first The outlook for 2008 and 2009 remain Web sites: Highway and Street 4% 10% 7% 12% -5% -1% 3% 9% 12% 7% 4% 4% 4% 6% 6%
negative for total construction put Sewage and Waste Disposal 0% 12% 9% 10% 35% 2% 8% 11% 16% 7% 3% 4% 6% 6% 5%
time since 2003. Flat residential and
www.fminet.com Water Supply 3% 7% 13% 9% 32% 0% 1% 11% 6% 5% 2% 2% 6% 6% 7%
steady nonbuilding construction will in place. However, there are a few Conservation and Development 2% 10% 9% 18% -9% 9% 3% 10% 20% 7% 4% 4% 6% 5% 4%
not mitigate the nonresidential loss. bright spots in the nonresidential and www.fmisource.com Total Nonbuilding Structures 7% 8% 14% 11% 5% 4% -2% 7% 12% 12% 6% 6% 6% 8% 8%
nonbuilding sectors. Public construction Total Put in Place 8% 9% 8% 4% 1% 6% 11% 11% 5% -3% -4% -1% 5% 7% 7%
However, public works construction will
*Improvements include additions, alterations and major replacements. It does not include maintenance and repairs.
fare better than the rest of the market. will help to mitigate some of the loss.
FMI’s Construction Outlook – Second Quarter 2008 FMI’s Construction Outlook – Second Quarter 2008

out of energy and other commodity Public safety construction will remain
prices and an easing of pressures on fairly strong, increasing 8% in 2008 Construction Put in Place
resource utilization. Still, uncertainty to almost $10.7 billion and increasing Estimated for The United States
about the inflation outlook remains another 2% in 2009 to $10.9 billion. Millions of Current Dollars
The current highway bill, SAFETEA- 2nd Quarter 2008
high. The Fed will continue to monitor
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
developments closely. They believe the LU, expires in 2009. FMI predicts an RESIDENTIAL BUILDINGS
substantial easing of monetary policy to extension of this bill rather than a new Single Family 201,053 225,601 237,867 251,063 265,889 310,575 377,557 433,510 415,997 303,471 245,812 240,896 252,940 273,176 292,298
date, combined with ongoing measures authorization until the elections are Multi Family 29,152 32,289 32,607 35,610 38,133 40,200 45,298 52,598 58,791 54,735 49,262 47,784 49,217 50,694 54,242
Improvements* 91,371 100,072 109,908 109,798 123,154 130,381 147,480 160,845 172,628 173,122 169,660 176,446 185,268 198,237 208,149
to foster market liquidity, should over, despite the dire predictions that
Total Residential 321,576 357,963 380,382 396,471 427,176 481,156 570,335 646,953 647,416 531,328 464,733 465,125 487,426 522,106 554,689
help promote moderate growth over the Highway Trust Fund will shortly NONRESIDENTIAL BUILDINGS
time and mitigate risks to economic incur a deficit. Congested highways Lodging 15,333 16,512 16,850 15,486 10,869 10,712 12,363 12,840 18,047 29,922 31,118 26,139 27,185 28,816 31,121
and corroding bridges are clearly a Office 47,426 51,977 61,001 59,495 44,277 39,418 42,404 45,763 54,644 65,359 63,399 53,889 56,044 58,847 62,377
activity. The Committee will continue
Commercial 59,116 63,329 67,873 68,506 62,520 61,529 67,057 70,242 75,518 85,398 81,128 68,959 71,027 75,999 81,319
to monitor economic and financial problem for our nation. However, Health Care 21,887 22,797 24,615 24,776 27,139 29,329 32,184 34,430 39,525 45,037 48,190 49,153 53,577 60,006 67,207
developments and will act as needed to funding to correct these problems is Educational 46,421 52,456 58,848 64,960 73,862 74,316 74,250 79,687 85,992 98,441 102,379 104,427 109,648 119,516 130,273
promote sustainable economic growth an issue. Escalating highway and street Heather Jones Religious 6,662 7,433 8,071 8,806 8,339 8,569 8,159 7,735 7,700 7,538 6,784 5,970 6,030 6,211 6,459
Public Safety 9,631 9,762 10,049 9,558 7,827 7,161 7,019 7,314 7,806 9,866 10,655 10,868 11,520 12,441 12,939
and price stability. construction costs are only adding Construction Economist Amusement and Recreation 17,072 19,525 20,168 20,207 17,328 16,847 16,695 15,236 18,248 20,555 20,144 18,331 18,881 20,014 21,014
pressure, and there are now new doubts Transportation 19,228 19,525 22,887 24,409 25,781 24,710 25,059 25,052 27,038 31,305 33,810 34,486 37,590 40,597 43,032
CPI is the most widely used measure as to whether public-private partnerships Heather Jones is a construction Communication 12,636 18,617 18,958 20,173 18,457 14,550 15,546 18,906 21,653 26,200 27,772 28,328 30,027 31,529 32,790
Manufacturing 41,015 33,107 32,184 30,364 22,926 21,508 23,808 30,040 34,461 37,646 40,281 41,892 43,568 45,311 47,576
of inflation and has remained low by (PPP) are the answer to our problems. economist in the Research Services
Total Nonresidential Buildings 296,427 315,041 341,503 346,739 319,325 308,649 324,544 347,245 390,632 457,267 465,659 442,441 465,097 499,287 536,109
historical standards. Core CPI (CPI Therefore, FMI expects highway and Group. She is responsible for design, NONBUILDING STRUCTURES
minus volatile food and energy) rose street construction to increase 4% per Power 24,012 24,796 32,289 35,025 36,804 41,450 35,395 35,466 39,106 49,784 55,758 61,334 66,854 74,876 83,861
management and performance of Highway and Street 45,842 50,248 54,002 60,554 57,484 57,139 58,623 64,139 71,929 77,139 80,225 83,434 86,771 91,977 97,496
0.1% on a seasonally adjusted basis in year from 2008 to 2010. Sewage and Waste Disposal 9,027 10,071 10,949 12,006 16,237 16,581 17,929 19,867 22,990 24,603 25,342 26,355 27,936 29,613 31,093
primary and secondary market
April after increasing 0.3% in March. Water Supply 7,096 7,617 8,587 9,397 12,442 12,492 12,620 14,028 14,842 15,601 15,913 16,231 17,205 18,237 19,513
This translates into an increase of 1.8% Water is an important concern in research projects and related research Conservation and Development 2,798 3,076 3,362 3,967 3,621 3,935 4,044 4,453 5,322 5,690 5,918 6,154 6,524 6,850 7,124
our nation. Aging infrastructure, activities, including economic analysis Total Nonbuilding Structures 88,776 95,808 109,190 120,949 126,588 131,597 128,611 137,953 154,189 172,817 183,154 193,508 205,289 221,553 239,088
over the past four months, near the
Total Put in Place 706,779 768,811 831,075 864,159 873,090 921,403 1,023,487 1,132,149 1,192,238 1,161,412 1,113,546 1,101,074 1,157,812 1,242,946 1,329,886
Fed’s 2% target range. Rising general population growth and net migration and modeling, construction market *Improvements include additions, alterations and major replacements. It does not include maintenance and repairs.
inflation, plus some rapidly rising are fueling demand for new and forecasting and database management.
material costs could become perilous replacement construction. As the
Heather’s particular expertise is in the
for nonresidential construction. Steel population grows, more need is placed Construction Put in Place
prices continue to rise and copper on the systems. Net migration also areas of market sizing and modeling, Estimated for The United States
prices remain elevated. plays a role in where these needs are. competitive analysis, sales and market Change From Prior Year - Current Dollar Basis
2nd Quarter 2008
The Sunbelt will have the most need performance evaluations, buying 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Housing will be a drag on the economy for new and replacement construction practices and trends analysis. RESIDENTIAL BUILDINGS
again in 2008. It is not expected to begin due to general population growth and Single Family 13% 12% 5% 6% 6% 17% 22% 15% -4% -27% -19% -2% 5% 8% 7%
Multi Family 6% 11% 1% 9% 7% 5% 13% 16% 12% -7% -10% -3% 3% 3% 7%
recovering until 2009. All segments of positive net migration to this area. Improvements* -1% 10% 10% 0% 12% 6% 13% 9% 7% 0% -2% 4% 5% 7% 5%
the residential sector will remain down, The Rustbelt will require replacement Total Residential 8% 11% 6% 4% 8% 13% 19% 13% 0% -18% -13% 0% 5% 7% 6%
led by single family (-19%), followed by construction due to the age of its FMI Corporation NONRESIDENTIAL BUILDINGS
Lodging 14% 8% 2% -8% -30% -1% 15% 4% 41% 66% 4% -16% 4% 6% 8%
multi family (-10%) and then finishing systems, but will have less population 5171 Glenwood Office 19% 10% 17% -2% -26% -11% 8% 8% 19% 20% -3% -15% 4% 5% 6%
with improvements (-2%). than before. Terrorism threats will also Commercial 4% 7% 7% 1% -9% -2% 9% 5% 8% 13% -5% -15% 3% 7% 7%
add to the need for additional spending Suite 200 Health Care -2% 4% 8% 1% 10% 8% 10% 7% 15% 14% 7% 2% 9% 12% 12%
Educational 5% 13% 12% 10% 14% 1% 0% 7% 8% 14% 4% 2% 5% 9% 9%
Total construction in 2008 and 2009 for our water and sewer systems. Water Religious 14% 12% 9% 9% -5% 3% -5% -5% 0% -2% -10% -12% 1% 3% 4%
Raleigh, NC 27612
will be down 4% and 1%. The decline supply and sewage and waste disposal Public Safety 11% 1% 3% -5% -18% -9% -2% 4% 7% 26% 8% 2% 6% 8% 4%
in 2008 is based upon large decreases construction will increase by 2% and Amusement and Recreation 5% 14% 3% 0% -14% -3% -1% -9% 20% 13% -2% -9% 3% 6% 5%
Tel: 919.785.9335
Transportation 9% 2% 17% 7% 6% -4% 1% 0% 8% 16% 8% 2% 9% 8% 6%
in residential construction that will not 3% in 2008 and by 2% and 4% in Communication 0% 47% 2% 6% -9% -21% 7% 22% 15% 21% 6% 2% 6% 5% 4%
be offset by gains in nonresidential and 2009. These increases come despite a Fax: 919.785.9320 Manufacturing 7% -19% -3% -6% -24% -6% 11% 26% 15% 9% 7% 4% 4% 4% 5%
decrease in state and federal revenues. Total Nonresidential Buildings 7% 6% 8% 2% -8% -3% 5% 7% 12% 17% 2% -5% 5% 7% 7%
nonbuilding construction. The decline E-mail: hjones@fminet.com NONBUILDING STRUCTURES
in 2009 will be driven by a decrease in Power 20% 3% 30% 8% 5% 13% -15% 0% 10% 27% 12% 10% 9% 12% 12%
nonresidential construction for the first The outlook for 2008 and 2009 remain Web sites: Highway and Street 4% 10% 7% 12% -5% -1% 3% 9% 12% 7% 4% 4% 4% 6% 6%
negative for total construction put Sewage and Waste Disposal 0% 12% 9% 10% 35% 2% 8% 11% 16% 7% 3% 4% 6% 6% 5%
time since 2003. Flat residential and
www.fminet.com Water Supply 3% 7% 13% 9% 32% 0% 1% 11% 6% 5% 2% 2% 6% 6% 7%
steady nonbuilding construction will in place. However, there are a few Conservation and Development 2% 10% 9% 18% -9% 9% 3% 10% 20% 7% 4% 4% 6% 5% 4%
not mitigate the nonresidential loss. bright spots in the nonresidential and www.fmisource.com Total Nonbuilding Structures 7% 8% 14% 11% 5% 4% -2% 7% 12% 12% 6% 6% 6% 8% 8%
nonbuilding sectors. Public construction Total Put in Place 8% 9% 8% 4% 1% 6% 11% 11% 5% -3% -4% -1% 5% 7% 7%
However, public works construction will
*Improvements include additions, alterations and major replacements. It does not include maintenance and repairs.
fare better than the rest of the market. will help to mitigate some of the loss.
FMI’s Construction Outlook – Second Quarter 2008
FMI’s Construction Market Forecasts
BENEFITS
A Construction Market Forecast from
FMI’s Research Services Group can:
• Supply the market-oriented, economy-driven
dimension essential for preparing, implementing
and monitoring strategic plans.
• Be a significant aid in defining, targeting,
implementing and monitoring other critical
corporate decisions, such as long and short-term
sales goals, or redirecting resources; for example,
on a geographic or a product-line basis.
• Provide the basis for estimating sub-markets.
• Provide the basis for comparing performance
among markets.
• Provide the basis for identifying activities that are
beneficial or detrimental to performance.
FEATURES
Each Standard Construction Market Forecast:
• Details construction put in place in three
residential building, 11 nonresidential building
and five nonbuilding structure categories. It
covers the current year, eight previous years and
five forecasted years. It is available for any county
in the U.S., or any combination of counties,
metropolitan statistical areas, states, regions, etc.
• Includes both construction values and annual
percentage changes. Delivery time depends on
the size of the request but is usually only a few
days. It can be delivered in printed or electronic
form, in most major text or spreadsheet formats.
Graphs can be provided at additional cost.
BASIS
• Historical information in FMI’s standard
Construction Market Forecast is based on
building permits and construction put in
place data as provided by the U.S. Commerce
Department. Forecasts are based on econometric
and demographic relationships developed by
FMI, on information from specific projects
gathered from trade sources, and on FMI’s
analysis and interpretation of current and
expected social and economic conditions.
OTHER REPORTS
• Reports on state and federally financed
highway construction are available for most
counties or combinations of counties.
• Custom reports on a wide variety of construction-
related topics can be prepared by FMI.
• Reports are based on multiple sources and are
appropriate for preliminary analytical and
planning purposes, but contain little or no direct
observation of the area described and are not
guaranteed to be accurate by FMI.
For more information, call
919.785.9335
FMI’s Construction Outlook – Second Quarter 2008
FMI’s
About FMI
Founded in 1953 by Dr. Emol A. Fails, FMI provides management consulting and investment
Construction Outlook
banking for the worldwide construction industry.
Second Quarter 2008 Report
FMI, management consultants and investment bankers to the building and construction industry,
delivers innovative solutions to contractors, architects and engineers, construction materials producers, Director of The Conference Board
manufacturers and suppliers of building products and construction equipment, private owners,
residential builders, utilities, government agencies, surety companies and trade associations. “The Fed continues cutting rates to Consumer Research Center. “This
continued weakening suggests that not
only has the feeble level of growth in
FMI’s management consulting practice provides a wide array of services, including strategy, training stimulate the economy, but inflation is the first quarter spilled over into the
second quarter, but that economic
and talent development, leadership and organizational development, market research, project
execution, business development and compensation consulting. FMI’s investment banking practice becoming a threat and a pause is likely.” conditions may have slowed even
further. And, not only are lackluster
provides merger and acquisition advisory services, capital placement and financial advisory services. business and job conditions eroding
confidence, but rising gasoline prices
The outlook for 2008 remains much The employment situation appears to are undoubtedly heightening concerns.
About FMI’s Research Services Group the same. However, the outlook for
2009 has been revised down slightly
be holding fairly steady; however, it
can change quickly. Employment and
Consumers’ inflation expectations
continue to rise and this measure now
because a downturn in nonresidential the unemployment rate in April were matches the all-time high reached in
As the construction industry becomes increasingly competitive, market intelligence becomes an important tool
construction usually lags a slow essentially unchanged. The employment the aftermath of Hurricane Katrina.
for the building industry. A more complete understanding of the market, market trends, customer perceptions, down in the general economy. The rate remained at 5.0%. Employment The percentage of respondents
buying practices, competitor profiles and other market influencers will enhance craft labor studies. economic indicators released over decreased by 20,000 in April to 146.3 intending to take a vacation over the
the past three months are somewhat million following job losses that totaled next six months has fallen to a 30-year
Since 1953, FMI has provided consulting and training services specialized for the construction industry. FMI’s mixed. Housing remains a drag on the 240,000 in the first three months of low, another sign of consumers turning
market research includes both secondary and primary research designed to meet clients’ specific needs. Both economy although a few early signs the year. Construction employment more cost conscious. Looking ahead,
point to the bottom possibly nearing. decreased by 61,000 in April and has consumers’ outlook for the economy,
types of research are used to provide accurate assessments in a timely, efficient and concise manner for clients.
Credit tightening is still an issue, but fallen by 457,000 since its peak in the job market and their income
Typical project work performed includes customer buying practices, competitive analyses, market-size also shows some signs of potential September 2006. prospects remains quite pessimistic and
modeling, market forecasts and trends, channel performance analyses, customer satisfaction surveys and sales easing. Consumer spending, while still little changed from last month. Or,
performance evaluations. positive, continues to slow, and the The Conference Board’s Consumer in other words, the glass remains half
employment situation appears to be Confidence Index, which declined empty.” Credit tightening remains an
steadying, albeit at a lower level. The sharply in March, fell further in April. area of concern for the Federal Open
Market Committee, or the Fed. The
Fed continues cutting rates to stimulate The Index is now 62.3, down from
the economy, but inflation is becoming 65.9 in March. The Expectations Federal Reserve has lowered the target
a threat and a pause is likely. While the Index rose slightly to 50.1 from federal funds rate from 5.25% in
general economy might be beginning 49.4. The Present Situation Index September to 2.0% at the end of April.
Raleigh Denver Tampa Phoenix
to stabilize somewhat, nonresidential decreased to 80.7 from 90.6. The The Fed stated, “Recent information
5171 Glenwood Avenue 55 Madison Street 5301 W. Cypress Street 5080 N. 40th Street construction is expected to falter late in Consumer Confidence Index is viewed indicates that economic activity
2008 and into 2009. as a leading indicator for consumer remains weak. Household and business
Suite 200 Suite 410 Suite 201 Suite 245
spending, which drives two-thirds spending has been subdued, and labor
Raleigh, NC 27612 Denver, CO 80206 Tampa, FL 33607 Phoenix, AZ 85018 markets have softened further. Financial
Real GDP growth in the first quarter of the U.S. economy. Decreasing
P 919.787.8400 P 303.377.4740 P 813.636.1364 T 602.381.8108 was 0.9%, according to preliminary consumer confidence has just begun markets remain under considerable
F 919.785.9320 F 303.377.3535 F 813.636.9601 F 602.381.8228
estimates released by the Bureau of
Economic Analysis. Fourth quarter
to translate into a slow down in
consumer spending.
stress, and tight credit conditions and
the deepening housing contraction are
GDP grew at a dismal 0.6% according
to final estimates. Growth is expected “This month’s decline in Consumer
likely to weigh on economic growth
over the next few quarters.” The Federal
to remain slow in 2008 before picking Confidence was the result of yet Open Market Committee (FOMC)
up slightly in 2009. another sharp decline in the Present expects inflation to moderate in coming
Situation Index,” says Lynn Franco, quarters, reflecting a projected leveling-
FMI’s Construction Outlook – Second Quarter 2008
FMI’s Construction Market Forecasts
BENEFITS
A Construction Market Forecast from
FMI’s Research Services Group can:
• Supply the market-oriented, economy-driven
dimension essential for preparing, implementing
and monitoring strategic plans.
• Be a significant aid in defining, targeting,
implementing and monitoring other critical
corporate decisions, such as long and short-term
sales goals, or redirecting resources; for example,
on a geographic or a product-line basis.
• Provide the basis for estimating sub-markets.
• Provide the basis for comparing performance
among markets.
• Provide the basis for identifying activities that are
beneficial or detrimental to performance.
FEATURES
Each Standard Construction Market Forecast:
• Details construction put in place in three
residential building, 11 nonresidential building
and five nonbuilding structure categories. It
covers the current year, eight previous years and
five forecasted years. It is available for any county
in the U.S., or any combination of counties,
metropolitan statistical areas, states, regions, etc.
• Includes both construction values and annual
percentage changes. Delivery time depends on
the size of the request but is usually only a few
days. It can be delivered in printed or electronic
form, in most major text or spreadsheet formats.
Graphs can be provided at additional cost.
BASIS
• Historical information in FMI’s standard
Construction Market Forecast is based on
building permits and construction put in
place data as provided by the U.S. Commerce
Department. Forecasts are based on econometric
and demographic relationships developed by
FMI, on information from specific projects
gathered from trade sources, and on FMI’s
analysis and interpretation of current and
expected social and economic conditions.
OTHER REPORTS
• Reports on state and federally financed
highway construction are available for most
counties or combinations of counties.
• Custom reports on a wide variety of construction-
related topics can be prepared by FMI.
• Reports are based on multiple sources and are
appropriate for preliminary analytical and
planning purposes, but contain little or no direct
observation of the area described and are not
guaranteed to be accurate by FMI.
For more information, call
919.785.9335
FMI’s Construction Outlook – Second Quarter 2008
FMI’s
About FMI
Founded in 1953 by Dr. Emol A. Fails, FMI provides management consulting and investment
Construction Outlook
banking for the worldwide construction industry.
Second Quarter 2008 Report
FMI, management consultants and investment bankers to the building and construction industry,
delivers innovative solutions to contractors, architects and engineers, construction materials producers, Director of The Conference Board
manufacturers and suppliers of building products and construction equipment, private owners,
residential builders, utilities, government agencies, surety companies and trade associations. “The Fed continues cutting rates to Consumer Research Center. “This
continued weakening suggests that not
only has the feeble level of growth in
FMI’s management consulting practice provides a wide array of services, including strategy, training stimulate the economy, but inflation is the first quarter spilled over into the
second quarter, but that economic
and talent development, leadership and organizational development, market research, project
execution, business development and compensation consulting. FMI’s investment banking practice becoming a threat and a pause is likely.” conditions may have slowed even
further. And, not only are lackluster
provides merger and acquisition advisory services, capital placement and financial advisory services. business and job conditions eroding
confidence, but rising gasoline prices
The outlook for 2008 remains much The employment situation appears to are undoubtedly heightening concerns.
About FMI’s Research Services Group the same. However, the outlook for
2009 has been revised down slightly
be holding fairly steady; however, it
can change quickly. Employment and
Consumers’ inflation expectations
continue to rise and this measure now
because a downturn in nonresidential the unemployment rate in April were matches the all-time high reached in
As the construction industry becomes increasingly competitive, market intelligence becomes an important tool
construction usually lags a slow essentially unchanged. The employment the aftermath of Hurricane Katrina.
for the building industry. A more complete understanding of the market, market trends, customer perceptions, down in the general economy. The rate remained at 5.0%. Employment The percentage of respondents
buying practices, competitor profiles and other market influencers will enhance craft labor studies. economic indicators released over decreased by 20,000 in April to 146.3 intending to take a vacation over the
the past three months are somewhat million following job losses that totaled next six months has fallen to a 30-year
Since 1953, FMI has provided consulting and training services specialized for the construction industry. FMI’s mixed. Housing remains a drag on the 240,000 in the first three months of low, another sign of consumers turning
market research includes both secondary and primary research designed to meet clients’ specific needs. Both economy although a few early signs the year. Construction employment more cost conscious. Looking ahead,
point to the bottom possibly nearing. decreased by 61,000 in April and has consumers’ outlook for the economy,
types of research are used to provide accurate assessments in a timely, efficient and concise manner for clients.
Credit tightening is still an issue, but fallen by 457,000 since its peak in the job market and their income
Typical project work performed includes customer buying practices, competitive analyses, market-size also shows some signs of potential September 2006. prospects remains quite pessimistic and
modeling, market forecasts and trends, channel performance analyses, customer satisfaction surveys and sales easing. Consumer spending, while still little changed from last month. Or,
performance evaluations. positive, continues to slow, and the The Conference Board’s Consumer in other words, the glass remains half
employment situation appears to be Confidence Index, which declined empty.” Credit tightening remains an
steadying, albeit at a lower level. The sharply in March, fell further in April. area of concern for the Federal Open
Market Committee, or the Fed. The
Fed continues cutting rates to stimulate The Index is now 62.3, down from
the economy, but inflation is becoming 65.9 in March. The Expectations Federal Reserve has lowered the target
a threat and a pause is likely. While the Index rose slightly to 50.1 from federal funds rate from 5.25% in
general economy might be beginning 49.4. The Present Situation Index September to 2.0% at the end of April.
Raleigh Denver Tampa Phoenix
to stabilize somewhat, nonresidential decreased to 80.7 from 90.6. The The Fed stated, “Recent information
5171 Glenwood Avenue 55 Madison Street 5301 W. Cypress Street 5080 N. 40th Street construction is expected to falter late in Consumer Confidence Index is viewed indicates that economic activity
2008 and into 2009. as a leading indicator for consumer remains weak. Household and business
Suite 200 Suite 410 Suite 201 Suite 245
spending, which drives two-thirds spending has been subdued, and labor
Raleigh, NC 27612 Denver, CO 80206 Tampa, FL 33607 Phoenix, AZ 85018 markets have softened further. Financial
Real GDP growth in the first quarter of the U.S. economy. Decreasing
P 919.787.8400 P 303.377.4740 P 813.636.1364 T 602.381.8108 was 0.9%, according to preliminary consumer confidence has just begun markets remain under considerable
F 919.785.9320 F 303.377.3535 F 813.636.9601 F 602.381.8228
estimates released by the Bureau of
Economic Analysis. Fourth quarter
to translate into a slow down in
consumer spending.
stress, and tight credit conditions and
the deepening housing contraction are
GDP grew at a dismal 0.6% according
to final estimates. Growth is expected “This month’s decline in Consumer
likely to weigh on economic growth
over the next few quarters.” The Federal
to remain slow in 2008 before picking Confidence was the result of yet Open Market Committee (FOMC)
up slightly in 2009. another sharp decline in the Present expects inflation to moderate in coming
Situation Index,” says Lynn Franco, quarters, reflecting a projected leveling-