IHS Global Insight Forecasts 2010 Q4 Expectations

IHS Global Insight, Lexington, Mass., Residential construction activity will begin to see improvement in 2010, while nonresidential construction activity will not recover until 2011, according to the Second Quarter U.S. Building Materials Briefing by IHS Global Insight’s Building Materials Forecasting Service. Total building materials spending contracted by 1.02 percent in the first quarter of 2010 and is not expected to see positive growth until the last quarter of 2010. IHS Global Insight expects robust growth in materials predominantly used in residential construction, such as hardware, insulation and paint as growth returns to the residential construction industry. However, residential building materials will remain below 2006 peak and the recovery will be uneven. Nonresidential building materials, which were aided by the stimulus package, will continue to contract through the first quarter of 2011. And within the nonresidential building material sector, materials most intensively used in renovation activities will benefit earlier from the eventual recovery. Select key findings from the second quarter forecast include: Residential. The anticipated spending on residential building materials is expected to grow by 4.79 percent in the fourth quarter of 2010 and 15.71 percent between 2010 and 2015 based on IHS Global Insight’s latest forecast. Residential recovery will be uneven, with dimensional lumber emerging as a clear winner, particularly in California. Nonresidential. After declining by 11.11 percent from 2009 to 2010, nonresidential building materials’ spending is expected to bottom out by the end of 2010 and rebound slightly by 0.11 percent from 2010 to 2011. Although infrastructure spending was lifted by the stimulus package throughout 2009, total infrastructure material spending will contract through the first quarter of 2011. Infrastructure construction spending is expected to decline 4.7 percent in 2010 and another 2.1 percent in 2011 before returning to an annual growth pattern in 2012.