Feb. 22, 2011 -
PRLog -- The majority of international construction companies and building material providers were active in the US infrastructure sector over 2010. Order bookings were up for most, and revenue streams for USfocused units were buoyed by American Recovery and Reinvestment Act (ARRA)-funded contracts. However, with the stimulus package reaching the end of its life, gridlock in Washington and constrained local budgets, there are concerns about where the source of demand for infrastructure projects is going to come from beyond 2011. Despite this trepidation, we remain confident that the US construction industry emerged from its five-year recession in 2010 with real growth of 1.58% estimated. Growth, albeit minimal, will be maintained over our forecast period. Growth in 2010 was partly driven by base effects, with a 9.9% contraction experienced in 2009, but also by the relative ramping up of infrastructure investments through the stimulus bill. Our key views for the US construction sector remain: 􀂃
Construction industry value growth is to peak in 2011 (2.2%), as the majority of stimulus funding for projects is due to be disbursed in late 2010 and early 2011. 􀂃
Infrastructure is to outperform the construction industry over the forecast period. 􀂃
Increasing private sector participation presents upside potential beyond 2011. One reason for our optimism is that the majority of stimulus funding was dispersed in 2010 and into early 2011. This will ensure the impact of the ARRA on the construction industry will live on after the programme itself comes to an end. One negative however is the expiration of a number of financing mechanisms which have been supporting infrastructure investment. Not all of these have been renewed, for example, the Build America Bonds expired on 31 December 2010 and were not renewed. On the other hand, loan guarantees for renewable energy projects were extended. Against this backdrop, the opening up of the US infrastructure sector to public private partnerships (PPPs) will be crucial to create sustained contract opportunities. Many state and local governments are being forced to embrace the PPP model to implement large-scale and long-required infrastructure projects. California and Colorado are just two of the states that procured PPP projects over the past few months, joining the likes of Texas, Florida and Virginia.
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