Experts expect subtle growth of construction spending and starts throughout 2018.
The American Institute of Architects’ (AIA) Consensus Forecast Panel has predicted that construction starts and spending in 2018 will remain healthy with slight growth from 2017. The chart below provides the data forecasted by the AIA CCFP.
|Construction Starts||% +/- 2018||% +/1 2019||Construction Spending||% +/- 2018||% +/1 2019|
|Nonresidential||– 6.1%||+ 5.0%||Nonresidential||+ 4.0%||+ 3.9%|
|Residential||+ 2.7%||+ 9.3%||NA|
|Civil||+ 8.9%||+ 6.1%||NA|
|Commercial||+ 1.5%||+ 16.4%||Commercial||+ 4.4%||+ 2.9%|
|Industrial||– 21.2%||+ 10.6%||Industrial||+ 2.8%||+ 5.2%|
|Retail||– 8.6%||– 11.3%||Institutional||+ 3.8%||+ 4.3%|
As for employment, the construction industry continues to steadily grow, recovering from the last recession. Across all sectors of the industry, unemployment remains higher than the national average, but job openings rates and levels in the construction industry are lower than the historic high across all jobs in the nation.
Construction compensation and wages are increasing as jobs are harder to fill than the average position. The hourly wages are hanging around a 3.5-4% increase and weekly compensation is just a bit higher at a 4-5% increase.
Along with the troubles of filling salaried positions, the Associated General Contractors of America reported that 71% of firms are also having trouble finding craft labor candidates to fill openings. Among related fields of employment, like real estate and building materials, the growth for jobs is holding strong and shining a light on the positive outlook for construction as an industry.
Materials & Productivity Outlook
Due to recent tariffs on certain building materials, the cost is up 6% since this month last year. However, without certainty of how the tariffs will affect each industry, the panel wasn’t able to make any solid forecasts in this area showing the effect of possible trade issues.
While reports have been released in the past showing a flatline in construction productivity, the Bureau of Labor Statistics has recently revealed that four segments of the industry have increased from 2007 to 2016. The importance of construction firms continuing to make efforts to improve productivity remains high in the face of the rising cost of building materials and construction wages.
Economic indicators are positive for 2018, however, there may be a struggle to meet the expected demand. That, along with the uncertainty of the various trade tariff actions, could very well restrain growth from being as positive as it could be.
Read all the details from the AIA’s Consensus Construction Forecast Panel.