* Sees U.S. construction spending down 5.6 pct in 2011
* Sees 2012 rebound led by hotel sector
* Tight credit, govt budget shortfalls depress spending
NEW YORK, July 27 An architects' trade group
cut its 2011 U.S. construction forecast on Wednesday, citing
tight credit conditions, government budget shortfalls and a
depressed housing market.
The American Institute of Architects (AIA) said it now
expects spending on nonresidential construction projects to
fall 5.6 percent this year before rebounding in 2012. In
January it forecast a 2 percent decline this year.
"Consumer and business confidence is poor and the overall
economy has yet to pull out of the downturn that began in 2008,
which both add to the general sense of anxiety and uncertainty
in the real estate market" said AIA Chief Economist Kermit
"The depressed demand for new construction isn't likely to
improve until next year, led by the commercial sector: offices,
retail and hotels."
Overall nonresidential spending is expected to rise 6.4
percent in 2012, the group said, a slightly stronger recovery
than it forecast six months ago.
The AIA publishes a widely cited index of architecture
billings that is considered a leading indicator of construction
spending up to a year ahead. The billings index has been below
50, indicating contraction, for three consecutive months, after
recovering earlier in the year. [ID:nN1E76J08K]
The AIA Consensus Construction Forecast Panel is conducted
twice a year with leading nonresidential construction
forecasters, including McGraw Hill Construction, IHS-Global
Insight and Moody's economy.com.
NEW HOTELS IN 2012?
Construction of hotels and industrial space is forecast to
fall by double digits this year, while smaller declines are
forecast for the office and retail sectors.
But in 2012, spending on hotel construction is seen rising
18 percent. AIA said spending on factories and other industrial
buildings will rise 8.4 percent; office buildings up 9.8
percent; and retail up 11.8 percent.
The AIA forecast more modest recoveries next year in
institutional categories that include churches, schools and
A weak U.S. construction market has been a source of
frustration for multinational manufacturers that sell machinery
to erect buildings or components such as elevators and cooling
and security systems. Many industrial names stand to gain once
a full-fledged construction recovery finally gains momentum.
U.S. construction spending fell for a sixth straight month
in May to its lowest level in more than a decade, according to
a government report. June figures due on Monday are forecast to
be flat. [ECI/US]
Companies exposed to the sector include Honeywell
International Inc (HON.N), Tyco International Ltd TYC.N,
Ingersoll Rand (IR.N), Johnson Controls (JCI.N), Eaton Corp
(ETN.N), Caterpillar Inc (CAT.N), Emcor Group (EME.N) and Terex
European companies such as Siemens AG (SIEGn.DE), Schneider
Electric SA (SCHN.PA) and lock maker Assa Abloy (ASSAb.ST) are
also big players in the sector.
Industrial shares in the United States and Canada were down
sharply on Wednesday after leading conglomerate Emerson
Electric warned of slowing growth in major economies.
(Reporting by Nick Zieminski; editing by John Wallace)