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  • PCA Says Inflation Will Be a Problem
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    • Forecast 2006
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    One of the most optimistic forecasts for next year comes from FMI Corp. The Denver-based industry management consultant predicts that the dollar value of total construction put-in-place will increase 6.8% next year, following this year’s 7.2% increase. However, part of this increase will be driven by inflation. "Interest rates are not a concern at 7%. They are still low and affordable but inflation is something we really have to watch," says Heather Jones, a construction economist with FMI. Housing starts are going to slow and possibly decline but the value of construction put-in-place will continue to go up with higher labor and material costs. This will help push residential construction up 6.1% next year, she says.

    FMI is looking for the industry’s strongest growth trends to be in the nonresidential building markets. The office building market will see growth double to 10% next year with more than $50 billion in new office buildings put-in-place. FMI also is calling for strong double-digit growth in both the power and industrial markets. In addition, the firm predicts that growth will accelerate in the lodging, commercial, health care and educational building markets.