As we approach the latter part of the 3rd quarter, economists are releasing their forecasts for the rest of the year as well as projections for 2020. So, what’s expected for the construction industry? Let’s take a closer look.
How long will current economic stability last?
Many experts agree that the U.S. economy is performing well, but the biggest uncertainty is trying to determine how long that stability – and growth – will continue. Benjamin Duyck, the Director of Market Intelligence at the Association of Equipment Manufacturers (AEM), believes that the economy will experience a slowdown sooner rather than later.
Duyck says, “We actually entered 2019 quite strong. There’s high business confidence, high consumer confidence, and unemployment is at a historical low. But we do have rising interest rates, and unemployment is so low it’s creating labor constraints. There’s obviously a slowdown coming – maybe 2020?”
Not everyone agrees, although the ongoing trade war with China remains a concern. Goldman Sachs CEO, David Solomon, spoke to CNN saying, “I don’t think we’re at a moment where there is an impending economic crisis. But look, things could change. The underlying economy is still doing okay. The chance of a recession in the near term is still relatively low. But we have to watch what’s going on with tariffs.”
How will the construction industry fare?
During this time of economic stability, the construction industry is expected to experience year-over-year growth. Research and Markets outlined this prediction in their Global Construction Outlook to 2023 – Q1 2019 Update that was released this March. The report reads, “The pace of global construction growth is expected to pick up marginally in 2019, reaching 3.4% from 3.2% in 2018, before rising to 3.5% in 2020.”
However, as we’ve written about in the past, these projections of growth could ultimately be impacted by the trade war between the U.S. and China. The report goes on to say, “Risks to the overall forecast stem primarily from a possible escalation in the trade war between the U.S. and China, which would ultimately impact on investment and constrain global economic growth. There is also a risk that China could overstep its efforts to support the economy, resulting in an unmanageable debt crisis, which would disrupt investment trends globally, most notably via the impact on demand in commodities markets.”
Overall, experts tend to agree that barring an unforeseen development, the economy will continue to thrive and the construction industry will continue to grow in the coming year. Data from the Bureau of Labor Statistics shows the same, with a growth of 11% between 2016 and 2026 expected for construction and extraction occupations in the U.S.
Only time will determine the accuracy of these projections. We’ll keep you informed as more data and projections become available.