presentation on construction outlook at ahr expo in nyc jan 21 & 22, 2014
DESCRIPTION
Presentation on Construction Outlook with emphasis on nonresidential building construction. Given at the AHR Expo in NYC at the Javits Center on Jan 21 & 22, 2014TRANSCRIPT
2014 AHR Expo
January 2014
Outlook for the Economy and
Construction
Presented by: Bernard M. Markstein
Reed U.S. Chief Economist
Outlook for the Economy and Construction
3
State of the U.S. Economy
Economy improving
Employment growing, but should be faster
Inflation moderate
The Fed begins to taper
Housing/residential construction a positive
Outlook for the Economy and Construction
4
Risks to the Economy
The federal debt ceiling/Congress
The Fed and interest rates
Europe
European government debt default
The euro
Energy (oil) prices
Outlook for the Economy and Construction
5
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
02 03 04 05 06 07 08 09 10 11 12 13 14 15
Residential Nonresidential Building Heavy Construction
$ Billions
History Forecast
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
Forecast: Construction to improve
Construction Spending and its Components
Outlook for the Economy and Construction
6
Residential construction is
recovering, but from a low level
Single-family housing market is on the mend, but much
further to go before it is back to normal
Multifamily market has largely recovered, but still some
room for growth
Outlook for the Economy and Construction
7
0
50
100
150
200
250
300
350
400
450
500
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Thousands of Units, SAAR
Nation’s long-run (trend) need for
the next decade
High Estimate
(350,000 starts per year)
Nation’s long-run (trend) need
for the next decade
Low Estimate
(250,000 starts per year)
Multifamily Housing Starts
Source: U.S. Census Bureau
Outlook for the Economy and Construction
8
0
100
200
300
400
500
600
700
800
02 03 04 05 06 07 08 09 10 11 12 13 14 15
Improvements Single-family Multifamily
$ Billions
Residential Spending Components
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
History Forecast
Outlook for the Economy and Construction
9
200
225
250
275
300
325
350
375
400
425
450
475
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Billion $, SAAR
Forecast: Nonresidential construction to
strengthen
Construction Spending: Nonresidential Construction
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
Outlook for the Economy and Construction
10
0
10
20
30
40
50
60
70
80
90
100
Hotel/Lodging Office Commercial
$ Billions
2006 to 2012 ’13 ’14 ’15
Nonresidential Construction Spending
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
Outlook for the Economy and Construction
11
0
10
20
30
40
50
60
70
80
90
100
110
Manufacturing Healthcare Education
$ Billions
2006 to 2012 ’13 ’14 ’15
Nonresidential Construction Spending
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
Outlook for the Economy and Construction
12 Source: Philadelphia Federal Reserve Bank
Outlook for the Economy and Construction
13 Source: Philadelphia Federal Reserve Bank
Outlook for the Economy and Construction
14
Demand for HVAC Materials
Source: Intelligent Leads by Reed Construction Data
This heat map is a view of the
forecasted demand for materials
within CSI division 23 (HVAC) for new
construction and additions (excluding
renovation and alteration). Reed can
look at the forecasted demand for 26
individual categories within division
23 including such as HVAC insulation,
instrumentation and control for HVAC,
facility fuel piping, pumps and
storage tanks, HVAC ducts and
casings, etc.
Outlook for the Economy and Construction
15
PPI: HVAC
-3
-2
-1
0
1
2
3
4
5
6
7
8
100
110
120
130
140
150
160
170
180
1901982 = 100, Not Seasonally Adjusted Y/Y %
PPI Index (LHS)
Y/Y % (RHS)
177.1
2.8%
Up 13% from
recession low
(March 2008)
Source: Bureau of Labor Statistics
Outlook for the Economy and Construction
16
HVAC Input Costs
Source: RSMeans cost data
50
100
150
200
250
300
350
400
450
500
00 Q1 01 Q1 02 Q1 03 Q1 04 Q1 05 Q1 06 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 Q1 13 Q1
Copper pipe, Type L, 1/2" diam. Steel pipe, Schedule 40, black, threaded, 2" diam.
PVC pipe, Schedule 40, 2" diam. Aluminum sheet metal ductwork
Galvanized steel sheet metal ductwork
2000 Q1 = 100
Outlook for the Economy and Construction
17
Connect with Reed Construction Data
Twitter twitter.com/Bmarkstein
Twitter twitter.com/ReedConstrData
Facebook www.facebook.com/Reed-Construction-Data
LinkedIn www.linkedin.com/company/reed-construction-data
web www.reedconstructiondata.com
Outlook for the Economy and Construction
18
Contact Information and Links
Bernard M. Markstein
Office: 301-588-5190
Mobile: 404-952-3381
U.S. Forecast and Commentary: http://www.reedconstructiondata.com/market-
intelligence/articles/
Blog: http://www.reedconstructiondata.com/market-
intelligence/bernie-markstein/