Construction Industry Boom: Building Growth for the Steel Sector
Wasatch Steel 243 W 3300 S, Salt Lake City, UT 84115 (801) 486-4463
The steel industry expects an increase in demand as the housing and construction sector booms. Property building is the biggest consumer of steel products in the United States, comprising 40% of material usage. Building Growth and Positivity Recent reports from the U.S. Census Bureau show that construction spending is growing. In April, expenses on new properties and improvements to existing structures in the public and private sectors had increased 2.2%, reaching the annual rate of $1 trillion. This is the highest level of industry spending since November 2008.
Nonresidential construction expenses amounted to approximately two-thirds of the total spending. It grew to 4.7% in March on a year over year basis. The US Architecture Billings Index (ABI), an economic indicator that provides a nine-to-twelve month forecast of nonresidential construction spending activity, was steady at a score of over 50 in the first quarters of 2015. Scores above 50 showed an increase in billings. On the other hand, residential construction costs dipped by 2.3%. However, this had been compensated for by the significant growth of nonresidential spending, explaining the over-all increase in expenses in the construction sector over the period. Several factors contribute to the improving housing market. Prices are more competitive and property inventory looks positive in the resale trade. As construction companies continue growing, they demand a more robust workforce, thus contributing 45,000 employment opportunities, which is something positive for the economy. Industry analysts explained that the number of job vacancies has reached the highest level in the past 16 months.
Strength of the Steel Higher construction spending plays a crucial factor in the growth of the steel sector. Steelproducing companies supply key materials in the construction industry, including rebars, joists and decks. In particular, steel demand will grow stronger in non-residential and commercial-industrial construction projects, as experts forecast an increased need for more education facilities, government buildings, skyscrapers and public transport infrastructures. The American Institute of Architects also conducted studies showing that non-residential construction activities would increase to 7.7% and commercial-industrial to 11.8% this 2015. The booming construction sector drives the growing demand for steel, creating a positive forecast for the industry.
RESOURCES: http://www.wasatchsteel.com http://www.tradingeconomics.com/united-states/construction-spending http://www.ecmag.com/section/your-business/2015-construction-outlookeconomic-recovery-finds-its-footing