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2013 Outlook and Forecast

Happy New Year from Rock Products!

Everyone will likely remember 2012 for MAP-21, the MINExpo show, the contentious election, and the year the world didn’t end. What people would like to forget is the sluggish pace of economic growth, both on a national level, and more specifically, within the construction and construction-materials industries.

Most would agree that even sluggish growth is better than none, but market acceleration is needed, and needed fast. So where do we stand as 2013 begins? Let’s start with aggregates production.

Aggregates Production
The third quarter of the year went poorly for aggregates producers, however the 9-month totals for production actually showed a year-over-year increase. According to the latest report just released by the U.S. Geological Survey, an estimated 580 metric tons (Mt) of total construction aggregates was produced and shipped for consumption in the United States in the third quarter of 2012, a decrease of 5 percent compared with that of the same period of 2011. However the estimated production for consumption in the first 9 months of 2012 was 1.48 billion metric tons (Gt), a slight increase compared with that of the same period of 2011.

Construction Spending
The U.S. Census Bureau of the Department of Commerce announced that construction spending for the latest month and year-to-date were up. The one big down spot was highways, which year-over-year, were down. During October 2012, construction spending was estimated at a seasonally adjusted annual rate of $872.1 billion, 1.4 percent (±2.0 percent) above the revised September estimate of $860.4 billion. The October figure is 9.6 percent (±2.3 percent) above the October 2011 estimate of $795.7 billion.

New Construction Starts
New construction starts during the first 11 months of 2012 on an unadjusted basis were reported at $424.4 billion, up 3 percent compared to the same period a year ago, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. Again, one of the down areas was in the highway construction sector, which was down 9 percent

Looking Ahead to 2013
The U.S. transportation construction infrastructure market is expected to show modest growth in 2013, increasing three percent from $126.5 billion to $130.3 billion, according to the American Road and Transportation Builders Association’s (ARTBA) annual forecast. Growth is expected in highway and street pavements, private work for driveways and parking lots, airport terminal and runway work, railroads, and port and waterway construction. ARTBA predicts the bridge market, which has shown substantial growth over the last 10 years, to remain flat next year. 

Construction Put-In-Place to Expand
Management consulting and investment banking firm FMI predicts that construction-put-in-place (CPIP) at the end of 2012 will be between $826-$884 billion. FMI researchers also predict CPIP growth rates to be slightly ahead of GDP in 2013 and 2014. This would place the CPIP at more than $1 trillion by the end of 2014, nearly six percent of GDP.

Nonresidential Construction Prediction
In a 2013 construction forecast released Dec. 4, Associated Builders and Contractors (ABC) Chief Economist Anirban Basu predicted nonresidential construction spending to expand 5.2 percent next year, with much of the expansion coming from privately financed projects.

New Home Construction
Upward trends in recent months among a number of housing indicators point to a slow and steady growth in the nation’s housing market in 2013, Meanwhile, the number of improving housing markets across the nation continues to show considerable advancement.