More rough waters lie ahead for the worldwide construction industry, according to IHS Global Insight Construction Service, Lexington Mass., which predicts further decreases in construction spending. According to first-quarter data from 69 markets, IHS predicted construction spending would remain flat in 2010. However, Laura Hanlon, the research firm’s product manager, admits that, in light of recent economic turmoil, the first-quarter outlook was a little overly optimistic.

“As of quarter one, we were still optimistic for a flat 2010,” said Hanlon. “However, we just released a new forecast [on June 30], and with the information we have received through quarter two, we are little more pessimistic. Where we were predicting a flat 2010, our expectation has lowered to a -2.1% growth for this year, worldwide.”

This correlates to a drop in spending of more than $100 billion to $5.3 trillion during 2010.

According to its second-quarter report, IHS predicts U.S. construction spending will contract by 9% in 2010. However, Hanlon notes that although 2010 is expected to mark the fourth consecutive annual decline in U.S. construction activity and the first time since 2003 that total construction spending has been below $1 trillion in the U.S., there will be improvements in the coming years. IHS anticipates increased residential construction spending in 2010’s fourth quarter and into 2011. This increase correlates with a much-improved 8.6% growth rate in the U.S. in 2011, the first expansion since 2006.

While the U.S. continues to struggle along with Eastern and Western Europe, Asia and the Middle East remain in the black. Led by large infrastructure pushes by China and India—who “are leading the outlook” and expect double-digit growth in both of the next two years—Asia is expecting 5% growth in 2010, keeping its 10-year growth streak intact.

The first-quarter outlook notes a moderate increase, 1.6%, in Middle East construction spending after a 5.3% decline in 2009, its first of the new millennium.

Led by significant improvements in the U.S., Asia Pacific and South America along with the consistency of India, China and the Middle East, IHS predicts a global rebound in 2011 of about 4.5% growth, the first uptick since before the 2008 recession.

Global Construction Spending Declines
(ACTUAL GROWTH RATES IN BLACK; PROJECTED IN RED)
YEAR WORLD NORTH
AMERICA		 SOUTH
AMERICA		 WESTERN
EUROPE		 EASTERN
EUROPE		 MIDDLE EAST
& AFRICA		 AISA
2000
3.3%
5.5%
-0.6%
4.9%
8.5%
1.6%
-0.5%
2001
2.8%
2.2%
0.3%
2.5%
8.7%
13.6%
2.2%
2002
2.1%
1.2%
-3.0%
2.8%
-10.3%
5.6%
3.9%
2003
4.0%
3.0%
-6.7%
2.8%
9.0%
6.3%
6.5%
2004
6.0%
8.4%
12.3%
3.4%
4.3%
1.8%
7.4%
2005
6.6%
7.5%
10.1%
5.9%
7.2%
2.2%
6.7%
2006
7.2%
3.8%
11.0%
7.2%
15.4%
9.3%
8.4%
2007
2.9%
-4.1%
8.5%
2.0%
13.4%
10.2%
6.5%
2008
-1.2%
-6..4%
4.8%
-5.2%
8.0%
7.2%
3.9%
2009
-6.7%
-12.1%
-5.4%
-11.4%
-8.2%
-5.3%
1.8%
2010
-2.1%
-9.0%
5.0%
-6.1%
-4.9%
1.6%
5.0%
2011
4.5%
8.6%
6.3%
0.0%
3.8%
5.1%
6.0%
Source: IHS Global Insight Construction Services