Related Links: A Rebound in Nonresidential Building Markets Keeps Growth Going Commerce Predicts Housing Will Hold On NAHB Predicts That Higher Interest Rates Will Cool Off Housing PCA Says Inflation Will Be a Problem Markets Will Retrench in 2006 Shortage of Big Machinery Continues Amid Explosive Buying Spree Forecast 2006 The complete Forecast 2006 cover story with all data and analysis is free to ENR subscribers but can also be purchased for only $17.95. click here for more information.

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.