business

The nation's struggling construction industry will continue to suffer spending declines in 2011 but will see a notable rebound next year, according to a forecast released Monday by IHS Global Insight.

The quarterly report predicts a fairly dramatic rebound for Minnesota's hard-hit construction industry. This year total construction spending -- commercial and residential combined -- in Iowa and Minnesota will drop a respective 6.3 percent and 8.6 percent. Those are the smallest declines in the North Central Region, which includes both states.

Next year the North Central Region will see construction spending jump nearly 12 percent on strength in both residential and commercial building, with Minnesota and Missouri as the region's "growth leaders," according to the global economic and financial forecasting firm. The report doesn't detail the region's turnaround, but said it will be stimulated by an improving economy.

"Growth will strengthen in 2012 as employment growth continues, consumer confidence improves and consumer spending increases,'' the report said.

From 2011 through 2016, Minnesota's compound annual growth rate for construction spending will be 9.5 percent -- beating the national average of 8.62 percent, the report said.

The rosy forecast surprised some building professionals in Minnesota, where the construction industry has been hit hard by the real estate crash and recession. The sector has suffered deep job losses in recent years and the sputtering economic recovery has provided little lift so far this year. Global Insight's predicted construction rebound is sharper than what they expect.

"I think it's going to get better, but I don't it's going to be that significant," said Dave Semerad, head of Associated General Contractors of Minnesota, which represents a range of commercial builders.

The rebound will be muted by continued tightness in lending and some lingering impacts from the state shutdown, Semerad said.

Collin Barr, Minnesota regional president of Ryan Cos., said he sees a rebound too, but called the forecast "a little surprising." Minnesota rarely leads construction rebounds, he said.

"There's something they're seeing that other people in the industry are not."

ddepass@startribune.com • 612-673-7725 jbjorhus@startribune.com • 612-673-4683