Presentation to Construction Employers Association Nonresidential Construction Outlook

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1 Presentation to Construction Employers Association Nonresidential Construction Outlook Bernard M. Markstein U.S. Chief Economist Market Intelligence Reed Construction Data May 30, 2012

2 Reed Elsevier Reed Elsevier A world leading provider of professional information solutions in the Science, Medical, Legal, Risk, and Business Sectors. Reed Business Information (RBI) A leading global provider of business information, online data and marketing solutions. Reed Construction Data (RCD) A leading provider of construction information, market intelligence, and lead generation solutions.

3 Forecasts and Analysis Reed Construction Forecast Construction Starts Database Reed Market Fundamentals Market Intelligence Product Demand Report SpecTrends Expansion Index SpecAnalyzer Predict Plan Analyze Execute Building Product Marketing specedge SmartBuilding Index SmartBIM Solutions Construction Lead Services Reed Connect SmartSpecs DataLink

4 The Economy

5 Economy has been growing at a barely acceptable rate Employment growing, but not enough Unemployment rate down, but not for the right reasons Inflation moderate; oil prices falling

6 Housing recovering, but from a very low level Multifamily the one bright spot in housing Lending standards, although somewhat improved, remain relatively tight

7 Risks to the economy: Europe Energy (oil) prices Congress

8 Construction spending struggled in 2011

9 Construction Spending and its Components 1,400 1,300 1,200 1,100 1, $ Billions History Forecast Residential Nonresidential Building Heavy Construction

10 Construction Spending Components % 55.9% 33.7% 31.1% 27.3% 35.2% Residential Residential Nonresidential Building Nonresidential Building Heavy Construction Heavy Construction 2005 Total - $1,104 Billion 2011 Total - $790 Billion

11 but will improve this year and beyond

12 RCD TOTAL STARTS (YoY) Year-over-Year % Change

13 Total Construction Spending 1,250 Billion $, SAAR 1,200 1,150 1,100 1,050 1,

14 Total Construction Spending 20% Q/Q Percent Change, SAAR 15% 10% 5% 0% -5% -10% -15% -20% -25%

15 Residential construction is recovering, but from a low level

16 Residential Spending Components $ Billions History Forecast Improvements Single-family Multifamily

17 RCD RESIDENTIAL STARTS (YoY) Year-over-Year % Change

18 Construction Spending: New Residential Construction 550 Billion $, SAAR

19 Construction Spending: New Residential Construction 40% Q/Q Percent Change, SAAR 30% 20% 10% 0% -10% -20% -30% -40% -50% -60%

20 Nonresidential building construction will strengthen throughout 2012 and 2013

21 RCD NONRESIDENTIAL STARTS (YoY) 50 Year-over-Year % Change

22 RCD COMMERCIAL STARTS (YoY) 75 Year-over-Year % Change

23 RCD INSTITUTIONAL STARTS (YoY) 60 Year-over-Year % Change

24 Construction Spending: Nonresidential Building 500 Billion $, SAAR

25 Construction Spending: Nonresidential Building 30% Q/Q Percent Change, SAAR 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% -35%

26 Heavy engineering (nonbuilding) construction has held up best over the last few years and is expected to continue to improve over the next few years, though at a modest rate

27 RCD HEAVY ENGINEERING STARTS (YoY) Year-over-Year % Change

28 RCD HEAVY ENGINEERING STARTS (3-Month Moving Average, YoY) 60 3-Month Moving Average, Year-over-Year % Change

29 325 Billion $, SAAR Construction Spending: Heavy Engineering

30 40% Construction Spending: Q/Q Percent Change, SAAR Heavy Engineering 30% 20% 10% 0% -10% -20% -30%

31 A look at the region s performance

32 Construction Starts 7,000 6,500 6,000 5,500 $ Millions Ohio 48.7% ,000 4,500 4, % ,500 3,000 2,500 2,000 1,500 1, % Cleveland 39.2% 2.4% -10.2% 0 Source: Reed Construction Data

33 Heavy Engineering Construction Starts 1,200 $ Millions 1, , % 33.5% 13.2% % -9.6% Source: Reed Construction Data

34 Nonresidential Construction Starts 1,600 1,500 $ Millions 39.2% 86.3% 1,400 1,300 1,200 1,100 1, % % % Source: Reed Construction Data

35 Residential Construction Starts 2,400 $ Millions 2,200 2,000 1,800 1,600 1,400 1,200 1, % 0.2% 2.4% % 1.1% Source: Reed Construction Data

38 We do not have great highways because we are a great nation. We are a great nation because we have great highways. --DeWitt Greer, Chairman of the Texas Highways and Public Transportation Commission,

39 Questions?

40 Connect with Reed Construction Data: Twitter Facebook Construction-Data/ ?ref=ts LinkedIn

41 Bernard M. Markstein Office Mobile U.S. Forecast: Blog:

MUSTAFA MOHATAREM Chief Economist, General Motors

MUSTAFA MOHATAREM Chief Economist, General Motors INTRODUCTION The U.S. economy continues to grow at a gradual but also erratic pace The current recovery is one of the slowest in the post-wwii U.S. history.