No surprises here. Residential construction has been flat for most of the past year, confirming once again that the housing sector has stabilized. Nonresidential construction has been declining for the past year, after peaking almost three years after residential construction peaked. This lag suggests we could see further weakness in nonresidential construction for another year or two. That's a grim prospect, but there's a good chance that residential construction could start to pick up before too long, thus mitigating the overall decline in construction activity. This is the sector of the economy that is going to take the longest to recover, because it was the sector that boomed the most. But there's no reason that weakness in construction should keep the broad economy from expanding; there are lots of empty offices and commercial space just waiting to be occupied, at very attractive prices, by new and growing businesses.
My developer clients are all over the board on predictions as to when non-residential will rebound. The optimists say it will be 2011 ("It will be heaven in eleven"). The pessimists say not until 2015. I remember that after the 1991 bust it took until about 1995 for commercial construction to rebound. I hope it comes back faster but right now it's dead.
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