SPURRED by continued increases in federal funding and renewed economic growth, the US highway construction market should grow 4.2% in 2004, the chief economist for the American Road & Transportation Builders Association (ARTBA) said in an annual review of the industry.
“Looking back, the data show that highway and street construction is the most stable construction market in the United States,” said William Buechner, ARTBA vice-president of economics & research. “Year after year, it shows the most stable growth. Even during the past couple years, when highway construction showed little growth, this market still performed better than most general construction markets.”
Although Congress had not acted on highway legislation by the Modern Bulk Transporter January deadline, members were expected to approve $33.6 billion in federal highway investment for fiscal year (FY) 2004 in February. This would be an increase of $2 billion over FY 2003 levels, which will spur market growth.
The value of construction work performed on highways and bridges is projected to be a record $62.5 billion in fiscal year (FY) 2004, up from $60 billion in FY 2003, according to ARTBA.
Recent strengthening of the American economy will also be a contributing factor to the growth, Buechner adds. The nation's gross domestic product increased at an 8.2% annual rate in the third quarter of 2003. Economists expect the economy to grow 3.9% in 2004, and to move above four percent per year the following years.
“Renewed economic growth should ease the dire state and local budget situation and permit renewed growth of investment in highways and bridges,” Buechner says.
The ARTBA forecast also looks at the growth of the highway construction market over the next six years under several legislative proposals being considered as part of the reauthorization of the nation's highway and transit law known as TEA-21.
If Congress adopts the $375 billion House Transportation & Infrastructure Committee bill and state and local highway funding grows with the economy, there would be an average seven percent annual growth in the highway construction market over the next six years. The $311-billion Senate Environment & Public Works Committee bill would generate 4.8% annual growth, according to Buechner.
As for the outlook for public transit and airports, he says construction grew sharply in 2001 and 2002, but has eased off slightly in 2003. For FY 2004, Congress is expected to enact a small increase in federal transit investment — from $7.18 billion in FY 2003 to $7.3 billion. This will likely help maintain the high levels of construction activity of the past few years.
Construction work performed on airport runways, taxiways, and related projects was down in 2003, in part due to the diversion of more than $500 million of federal airport construction funds to airport security in FY 2002 and 2003. Legislation to discourage this diversion has been enacted. Congress has approved $3.4 billion in FY 2004 for airport construction — the same level as FY 2003. Eliminating the diversion of construction funds to airport security programs, however, should help foster modest growth in the airport construction market in 2004, Buechner says.