Strategic Solutions: Is the Construction Market Finally Turning Around?

 Construction-related end uses are among the largest categories of adhesive applications, making up approximately $4 billion of the $16 billion adhesive market in the U.S. The U.S. construction market has seen a 9% increase in spending for the first six months of 2012, compared to the first six months of 2011. This follows four consecutive year-over-year declines (see Figure 1). Despite the turnaround, private residential construction spending is only about 45% of its peak level, while private non-residential construction spending is faring slightly better, at about 65% of its 2006 peak.

Unlike coatings, where a major driver of demand is the turnover of existing homes, adhesive use in residential construction occurs primarily in new construction. Even there, however, the linkage is not what it used to be. Many market transactions have been made by institutions with a large portfolio of properties to resell, rather than by individual sellers. Often, properties that would normally have been repainted are not. The same sellers are having an impact on new residential construction as builders compete with existing, distressed home inventories, lowering the demand for new homes.