Construction Market Will Continue to Weaken in 2008, According to McGraw-Hill Construction Outlook

Expected 2% Decline Will Follow 8% Drop in 2007 as Credit Crunch Fallout


Oct 25, 2007, 01:00 ET from McGraw-Hill Construction

    NEW YORK, Oct. 25 /PRNewswire/ -- McGraw-Hill Construction, part of The
 McGraw-Hill Companies (NYSE:   MHP), today released its 2008 Construction
 Outlook, which forecasts a drop in overall U.S. construction spending for
 next year, fueled by tighter lending conditions and weaker job growth.
 Against this backdrop, the level of construction starts is expected to
 decline 2%, to $614 billion, following an 8% decline predicted for 2007.
     "The credit crunch that emerged at mid-2007 continues to be a major
 concern for construction and the overall economy," said Robert A. Murray,
 Vice President, Economic Affairs, McGraw-Hill Construction. "As a result,
 we're now predicting downturns in the previously resilient multifamily and
 commercial segments, as well as continued weakness in single-family home
     There are some positives for the market in 2008, Mr. Murray noted.
 Transportation projects should continue to see moderate growth amid a
 renewed emphasis on infrastructure maintenance and upgrades, particularly
 in the aftermath of the I-35W bridge collapse in Minneapolis. Financing
 from public sources will stay generally supportive, and the growth of
 public-private partnerships also offers the potential for greater funding.
 Finally, growth in "green" construction practices means that the demand for
 sustainable building design and materials will continue to rise.
     Highlights of the 2008 Construction Outlook include:
     -- Single-family housing will weaken further, given the large inventory of
        unsold homes and diminished loan availability to homebuyers.  A 3% drop
        in dollar volume is expected, corresponding to another 6% decline in
        the number of units.
     -- Multifamily housing will slide 8% in dollars and 11% in units,
        following steeper declines in 2007.  Condominium development is being
        dampened by greater scrutiny from lenders as well as reduced homebuyer
     -- Commercial buildings will slip 6% in dollar volume and 11% in square
        feet.  Tighter lending standards and the slower absorption of space
        will contribute to a measured downturn for stores, warehouses, offices,
        and hotels.
     -- Institutional buildings will rise 4% in dollar volume, while square
        footage edges up 1%.  School construction is expected to strengthen
        again after its 2007 pause, and transportation terminals are also
        expected to grow.  The other institutional structure types, including
        healthcare facilities, will see a modest loss of momentum.
     -- Manufacturing buildings will retreat 11% in dollar volume, after a 40%
        surge in 2007 that featured the start of several unusually costly
        projects plus a large number of ethanol plants.  Square footage for
        manufacturing buildings in 2008 is expected to advance 5%.
     -- Public works construction will move up 3%, following the 5% gain
        in 2007.  Highways and bridges are likely to receive greater funding
        when fiscal 2008 appropriations are approved.  The environmental
        project types should be up slightly next year, but site work connected
        to single family development will settle back.
     -- Electric utilities will see another modest decline in percentage terms,
        but essentially this project type is holding at the enhanced level
        achieved in 2006.
     The 2008 Construction Outlook was presented at the McGraw-Hill
 Construction Outlook Executive Conference in Washington, DC, which brought
 together top management from all parts of the construction industry
 including firms involved in building product manufacturing, architecture
 and design, contracting, engineering, industry associations and other
 industry professionals. The Construction Outlook is a mainstay of business
 planning for construction and manufacturing industry executives.
     The 2008 Construction Outlook is available for purchase at
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SOURCE McGraw-Hill Construction