Digital Innovation to Slow Construction Forecast

FMI, a provider of management consulting and investment banking to the engineering and construction industry, releases its Q2-2014 Construction Outlook. The forecast shows cautiously optimistic growth, as the forecast has been lowered a percent since the Q1-2014 Outlook. Construction-put-in-place for 2014 is now predicted to increase 7 percent over 2013 levels.

One reason for the prediction, is the growth of the digital world. With e-commerce becoming a larger market, especially in the retail and educational industries, brick and mortar will inevitably grow at a slower rate. This trend also is slowly affecting office, travel, recreation and even health care, as more time is spent online.

Select market predictions include:

• Residential –Affordability, mobility and uncertainty in the job market has been evident as new-home growth is slowing and renting remains a safer choice for many. With new jobs and pay scales not rising as fast as costs, the forecast has been adjusted from 18 percent growth to 12 percent in 2014.
• Commercial – With retail production slowing, due to the above mentioned expansion of e-commerce shopping, the industry growth rate will slow to 6 percent in 2014.
• Health Care – With political uncertainty continuing to hold off new health care facilities, the forecast is for CPIP to remain flat in 2014. However the $40.8 billion in new construction is expected to continue at a sustainable pace.
• Education – The largest sector of total nonresidential CPIP, education’s slowdown is a large contributor to slower growth in construction overall. 2014 will see only 1 percent growth in the market sector.
• Transportation – Construction for the transportation industry is one of the few areas that continues to see solid growth, with 2014 predicted to grow 7 percent. The shale oil boom, as well as the proposed $73.61 billion transportation bill are large contributing factors.