Non-residential construction remains active in spite of the residential market slowdown and credit crunch, according to the Turner Building Cost Index, published by leading national construction company Turner Construction.

The index shows a continuing shortage of skilled labor and uncertainty about the availability and cost of materials, putting upward pressure on construction costs over the next several quarters.

At the same time, a decline of nine points in the Architecture Billings Index in February indicates tougher times ahead for both design firms and contractors. The downturn could indicate a noticeable slowdown in commercial construction projects coming online over the next nine to twelve months, according to the American Institute of Architects (AIA).

Some AIA members, however, are still reporting strong business from a billings and demand standpoint.

The one bright spot in commercial construction continues to be the institutional sector, which is showing positive conditions for school, hospital and government construction.

Source: Building Design+Construction

Nonresidential construction starts were down 13.1% in January as compared to January 2007, according to Reed Construction Data. Monthly starts have been slowing since October 2007 and were down down 8% from December 2007

In 2007, nonresidential starts were up 10.6% as compared to the 2006.

The slowdown in nonresidential construction starts is expected to continue into the summer and then recover enough to end 2008 at about the same level as 2007. Commercial building starts are expected to be impacted most by an abrupt slowdown in Gross Domestic Product in the first half of 2008, according to Reed.

Statistics show that the education and health care sectors are both weakening, while starts in public safety buildings and cultural/religious facilities have not declined. Construction starts for heavy/engineering projects were down 13% from last January.

Source: Reed Construction Data

Architectural billings showed a healthy score in December, according to the Architecture Billings Index (ABI) reported by the American Institute of Architects this week. The index shows a nine to twelve month lag time between architectural billings and construction spending, so it’s a good outlook indicator for construction.
The December ABI was up a fraction to 55.4, from 55.3 in November, marking the 34th straight month with a positive score. That’s the longest run in the history of the survey, which began in 1995.

Source: Building Design+Construction 

The Portland Cement Association predicts that portland cement consumption will be down until at least 2010, as the depressed housing market affects consumer spending and commercial construction.

In the long term, though, cement use is expected to grow by 43% to 183-million tonness by 2030, 55-million tonness more than 2005. Highway construction, which accounts for 30% of total annual cement consumption, is expected to add 400,000 new roadway miles by 2030. And if “green” building continues to grow, energy efficient insulated concrete walls could account for 30% of all new homes, up from 7% today. That growth alone could use an additional eight million metric tons of cement.

Source: ENR 

The U.S. Commerce Department reports that construction spending edged up slightly in November, with the steep slump in housing offset by record spending on government and business projects, according to Engineering News Record.

At the same time, a key gauge of manufacturing activity fell in December to the lowest point in almost five years, indicating that the slowdown in housing and a credit crunch are having an impact on the overall economy.

The housing slump is the worst in more than two decades, following five boom years that pushed home sales and prices to record levels. Analysts believe the housing slowdown will last through much of 2008, forcing builders to slash construction plans to reduce a huge backlog of unsold homes.

The impact of the housing slump on the construction industry is cushioned somewhat by strength in government projects and non-residential activity, according to ENR.

Source: Engineering News Record

After two consecutive months of decline, the Architecture Billings Index (ABI) has rebounded and is up just over two points compared to its previous mark, according to the American Institute of Architects, which sees the report as an encouraging sign for the construction industry.

The index is a leading economic indicator of construction activity, providing a glimpse into the future of nonresidential construction activity. The typical lag time between architecture billings and construction spending is nine to twelve months.

Regionally, billings growth continued to slow at firms in the Northeast and South. Business conditions fell for two consecutive months in the West for the first time in nearly three years, but billings growth has picked up slightly in the Midwest, continuing to rebound from a late summer slowdown.”

Source:  Building Design+Construction