As shown in the 2015 FMI Quarterly Report, and in accordance with the first quarter of 2015, the construction industry continues to expand and increase its growth in the U.S.
According to FMI’s quarterly update, the first quarter of the year projected an 8% increase in 2015 for the construction niche, but after the second quarter passed, the forecast decreased to a 5% increase in 2015 due to a more conservative approach. While the estimate for expansion was scaled back, there are many indicators demonstrating additional signs of growth for the rest of 2015.
Residential housing put into place has increased overall during 2015. April of 2015 saw a 22% increase in housing starts, but then fell by 11.1% in May, according to the Commerce Department. Even with this decrease in the second quarter, the coming months look promising. Approved building permits increased 11.8% in May, which is the highest level since August of 2007. This will likely lead to jobs created to execute the housing starts, which is in correlation with the decreasing unemployment rate in the US – from 6.3% to 5.5% in May 2014 and May 2015, respectively.
Another indicator of future construction progress is the Architecture Billings Index (ABI), the index conducted by the AIA Economics and Research Group through the monthly Work-on-the-Boards survey. The results of this survey indicate whether billings from architects have fluctuated from month to month and drive the nonresidential construction activity 11 months later. While the ABI dropped in April to 48.8, the ABI for May showed expansion with a score of 51.9. Along with that, the new projects inquiry index rose to 61.5 in May compared to the 60.1 score in April.
Office rents are expected to increase by 3.3% in 2015 as new employers are looking to hire on more people. Consumer confidence has increased from 94.3 in April to 95.4 in May, demonstrating more of a willingness to rent or buy apartments, condos, homes and home improvements. Foreclosure rates are at their lowest since 2006, and mortgage rates have remained historically low. The second quarter analysis and results indicate that 2015 will be a year for expansion for the construction industry.
Barnes Dennig’s dedicated Construction and Real Estate team uses the latest trends and publications to stay ahead of the curve and provide the best possible recommendations. Have a Barnes Dennig Representative reach out to you to discuss how these findings may impact your business.