Heavy construction update

According to Reed Construction Data, spending in the heavy construction market is stalled at the September 2007 level, after adjusting for inflation. This is a combination of shortages in many highway trust funds, and a cut back on power facility construction in anticipation of slower expansion of electricity demand during the recession period. Tighter public budgets and the end to more than three years of rising corporate profits also contribute to the stall.

Commercial developers are slowing some ongoing projects and delaying some new project starts until they are more certain that they can lease them for an acceptable rate of return. No significant drop in construction activity is expected because the commercial market is not overbuilt as it was at the onset of recent recessions. A short, shallow recession will not prevent resumed growth later this year.

The institutional building market is stalled at the September 2007 level as the result of very cautious spending budgets adopted by most states for the current fiscal year after three years of booming public spending growth. The budgets are too grim for the recession scenario in the forecast so some relaxation of spending restraints is expected this spring. Your comment?