US Construction Industry Declined due to Economic downturn, Says Timetric29 Apr 2013 • by Natalie Aster
The US construction industry declined at a CAGR of -5.32% during the review period (2008–2012). This was largely a result of the country’s economic downturn, as well as the global financial crisis and subsequent austerity measures implemented by the government. Negative growth was experienced by all construction categories except infrastructure construction.
Residential construction was the largest market in the US construction industry, accounting for 30.6% of the industry’s total value. However, the residential market value declined at a CAGR of -7.42% during the review period, as a result of unfavourable economic conditions which make it difficult for US households to repay housing debt. Prospective buyers, especially those looking to get onto the property ladder, are also finding it difficult to secure mortgages without being asked to pay huge deposits.
According to the report “Construction in the US – Key Trends and Opportunities to 2017” by Timetric, commercial construction recorded a CAGR of -13.82% during the review period, which was the largest decline out of all the construction markets in the US. The country’s retail real estate market has seen subdued levels of investment over the last two years, and the retail sector has seen subdued levels of investment since 2008. Consumer spending has been cautious, owing to high levels of unemployment, low wage growth and an unfavourable economic outlook. The fear of government spending cuts and forthcoming tax hikes encouraged businesses to restrain from investment. With a scarcity of construction projects and surpass cuts by government employers, the country’s office vacancy rate dropped to its lowest level in 2012.
Construction in the US – Key Trends and Opportunities to 2017
Published: March, 2013
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The country’s infrastructure construction market output is forecast to record a CAGR of 5.97% over the forecast period. The US invested heavily in infrastructure projects during the review period and is anticipated to continue to invest over the forecast period. Owing to the extension of roads and rail networks, the expansion of air and marine ports and a strong pipeline of various infrastructure construction projects, US infrastructure construction output is expected to continue to grow over the forecast period.
Commercial construction is expected to be the fastest-growing construction market, with an anticipated CAGR of 6.13% over the forecast period. This is expected to be a result of various factors including low benchmark interest rates, declining unemployment rates and government initiatives aiming to stimulate the economy.
More information can be found in the report “Construction in the US – Key Trends and Opportunities to 2017” by Timetric.
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