Construction sector expected to rebound as stimulus package hits
The construction sector is an extremely important part of the American economy, accounting for revenues in excess of $1.7 trillion nationwide. And, not surprisingly, it is a very important market for the insurance industry, providing some $33.3 billion in premium, according to data compiled by MarketStance, Middletown, Connecticut.
The recent foreclosure crisis and economic downturn has had a dramatic impact on the industry, which saw strong growth in the 2005-2007 period, but which now expects a drop to almost nothing in 2007-2009. General building contractors, who enjoyed a 5.6% growth rate, are expected to have negative growth of 1.1% in 2007-2009. The other two major sectors—heavy construction and specialty trades—also will see significant drops, although their growth rates are expected to remain in the plus column.
Sales, 4-year forecast growth relative to
U.S. average (2007-2011)
However, MarketStance anticipates a quick turnaround, particularly in the heavy construction area (SIC 16), which includes highway construction; street construction; bridge and tunnel construction; elevated highway construction; and water, sewer and pipeline construction. The anticipated surge of government funding for infrastructure improvement that will be a major part of any stimulus package should play a significant role in this turnaround.
Heavy construction annual growth for the four-year period ending in 2011 is expected to average 3%, although that could be significantly higher in the latter years depending on the size and scope of the stimulus package. On the state level, Alabama is expected to outperform the national average by 8.1 points, followed by New Hampshire (5.4), Nebraska (5.2), and Texas and Wyoming (both at 4.8).
The construction industry employs more than 9.54 million people from some 3.25 million enterprises. It is an important niche for many independent agents across the country. A turnaround can’t come quickly enough.
For more information on this sector or any other niche markets, contact MarketStance at (888) 777-2587 or e-mail at firstname.lastname@example.org.