US construction sector has not yet recovered from recession

19 June 2012 22:09  [Source: ICIS news]

HOUSTON (ICIS)--The US construction sector has not yet recovered from the recession, an economist said on Tuesday.

While residential construction has started to pick up in recent months, the non-residential sector has not been as fortunate, said Kermit Baker, the chief economist for the American Institute of Architects.

However, residential construction activity remains weak, despite recent gains, and that influences non-residential construction activity, Baker said.

“Financing is still a huge problem in the construction sector,” he said. “It’s just beginning to thaw, but there is still not enough capital going into this sector.”

Baker said the weakness of the global economy as a whole, including weak job growth, the European debt crisis and the slowdown of the Chinese economy, has also played a part in keeping the construction markets weak.

But there are some positive signs.

“Corporate profits … are really quite strong,” Baker said. “They are at higher levels now than going into this recession. So they are giving companies the ability to invest in capital expansion, if they are so inclined.”

Consumer and business confidence has also been ticking up recently, and the fundamentals of the market, such as rent, vacancies and occupancy rates, are all showing signs of improvement.

($1 = €0.79)

By: Bobbie Clark
+1 713 525 2653

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