Fitch: U.S. Building Materials to Benefit from Construction Growth in 2016

CHICAGO--()--Continued growth in overall construction spending, albeit at a more moderate pace following a strong 2015, supports the stable outlook for the U.S. building and home products and services sector in 2016, according to Fitch Ratings' 2016 outlook report.

Fitch projects construction spending will expand 8% next year, driven by continued strength in new home and commercial construction. Fitch also expects modest growth in home improvement and public construction spending. The recent passage of the new $305 billion multi-year highway bill should boost public construction spending, although the positive effect will likely be more evident during the latter half of 2016 and into 2017.

Additionally, Fitch expects revenue growth to average 5%-7% for building materials companies in 2016. That, coupled with the sector's projected improvement in margins, stronger free cash flow generation, and lower debt levels could support some deleveraging of companies' balance sheets next year.

That said, 'Looming labor constraints could temper growth in construction spending in 2016,' said Director Robert Rulla. 'As the construction recovery continues to advance, labor shortfalls, project delays and higher labor costs are likely to persist and be more widespread.'

Fitch's '2016 Outlook: U.S. Building and Home Products and Services' report is available at 'www.fitchratings.com' or by clicking on the above link.

Additional information is available at 'www.fitchratings.com'.

2016 Outlook: U.S. Building and Home Products and Services (More Moderate Growth Ahead)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=874920

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Robert G. Rulla, CPA
Director
+1-312-606-2311
Fitch Ratings, Inc.
70 W. Madison St.
Chicago, IL 60602
or
Robert P. Curran
Managing Director
+1-212-908-0515
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com

Contacts

Fitch Ratings
Robert G. Rulla, CPA
Director
+1-312-606-2311
Fitch Ratings, Inc.
70 W. Madison St.
Chicago, IL 60602
or
Robert P. Curran
Managing Director
+1-212-908-0515
or
Media Relations:
Sandro Scenga, +1 212-908-0278
sandro.scenga@fitchratings.com