Construction spending on offices, shopping centres, hotels and industrial buildings in the US will fall this year and next as recession prompts businesses to delay or cancel plans, the American Institute of Architects said.
Non-residential construction may drop 11 per cent this year and five per cent in 2010, the Washington-based group said yesterday in its semi-annual Consensus Construction Forecast. The declines will follow an estimated eight to nine per cent gain in non-residential construction spending last year, the institute said.
As profits for businesses have fallen and the ability to get credit to finance projects has become far more difficult, construction plans have been put on hold or cancelled outright, Kermit Baker, the institute's chief economist, said in a statement. "This is not expected to turn around anytime soon and it's likely to get worse before it gets better."
Economists slashed forecasts for US growth in 2009. The world's largest economy will contract 1.5 per cent this year, a half percentage point more than projected last month, according to the median of 59 forecasts in a monthly Bloomberg News survey taken from January 5 to 12.
Construction of office buildings may drop 18 per cent this year and 11 per cent in 2010, the architects' institute said in its study.
Hotel construction probably will slump 20 per cent this year and 12 per cent in 2010. Construction of retail properties is forecast to fall 19 per cent this year and 6.6 per cent next year, and industrial construction is forecast to decline 11 per cent this year and 8.4 per cent in 2010, the institute said.