New Market Report Now Available: United States Infrastructure Report Q4 2013

From: Fast Market Research, Inc.
Published: Sun Nov 10 2013

We are maintaining our outlook for US construction industry value real growth to remain in positive territory over the medium term. Residential construction will be the biggest positive contribution to overall growth, as a recovery in the sector continues to gather ground. Conversely, non-residential building is struggling to gain traction overall, dragged down by weak public sector spending. Infrastructure will remain the weak spot - highly reliant on public investment, the sub-sector is being choked by fiscal austerity and political gridlock. Overall, the construction sector will post growth of 1.3% and 0.9% in 2013 and 2014.

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Key Developments:

* Residential construction will continue to be the main driver keeping growth in the construction sector in positive territory in 2013. Housing starts have continued their uneven growth path, reaching 891k in August May 2013. However, they are still some way below peak of 2,273k seen in January 2006, indicating that there are further gains to be made. Indeed, residential construction spending is up 23% in the year to date, whilst residential permits, new home sales and house prices are also all trending upwards.
* Transport spending at the state and local level could be seeing signs of improvement following the passing of new transportation bills in a number of states. Facing crumbling transport networks local politicians have been pushing new and creative measures to top up state coffers to invest in infrastructure - including a state infrastructure bank which would be leveraged for commercial debt, changing fuels taxes and directing revenue generated elsewhere.
* Transport spending on a private level is still facing a mixed outlook, and as it currently accounts for only around 10% of total transport spending, still has some way to go before it can help precipitate a revival in investment. The failure of Chicago's Midway Airport privatisation programme is a prime example of politics getting in the way of bringing in private capital. Following strict bidding regulations, competition to operate the airport was weak, causing Chicago's mayor Rahm Emanuel to put the entire project on hold. Conversely, Cintra and Meridiam Infrastructure closed financing in September on a concession to extend the North Tarrant Express in Texas - a state that has been very successful in engaging private capital for highway projects.
* Renewable projects are slowing as rapidly as expected following the expiration of incentives in light of fiscal austerity, and subsequent emptying of the project pipeline. In the first four months of 2013 investment into the power sector contracted by 7%, guiding our forecast for a 1.7% real contraction in power plants and transmission grids industry value in 2013.

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Company: Fast Market Research, Inc.
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