With federal stimulus spending running out, the U.S. Congress in budget gridlock, and state and local governments cutting back on spending, public construction is expected to be the weakest sector in 2012. McGraw-Hill Construction forecasts public-works starts will decline another 5% next year, following a 16% drop in 2011 and a 4% dip in 2010. Likewise, institutional-building starts will decline 2% next year, after falling 15% in 2011, 2% in 2010 and 14% in 2009.
The market is generally healthy and steadily growing, and margins are up for large specialty contractors. Further, advances in design tools and owner demand for collaboration are giving subcontractors a seat at the table early on in projects.