For the first time in recent
"Over the past three years, the expansion for the U.S. construction industry has shown
"There are, of course, mounting headwinds affecting construction," Dodge's Murray said, "but for now these have been balanced by the stronger growth for the U.S. economy, some easing of bank lending standards, still healthy market fundamentals for commercial real estate, and greater state financing for school construction and enhanced federal funding for public works.”The U.S. economy grew by 3.5 percent in the third quarter of 2018 (the most recent quarterly numbers available), but a host of economic forecasters have predicted a slowdown in 2019 - Goldman suggested gross U.S. domestic product would slow to 1.8 percent in the third quarter of 2019 and to 1.6 percent during the fourth quarter. Not great, but not recession zone numbers, either.
Dodge is not the only construction industry watcher that sees a slowdown ahead. The American Institute of Architects on Jan. 16 forecast a 4.4 percent growth rate for nonresidential construction in 2019. But then the AIA said: "Healthy gains in the industrial and institutional building sectors have bolstered growth projections for 2019; however, the AIA Consensus Construction Forecast Panel—consisting of leading economic forecasters—is suggesting that a broader economic downturn may be materializing over the next 12-24 months."Said AIA Chief Economist Kermit Baker: “Though the economy has been performing very well recently, trends in business confidence scores are red flags that suggest a slowdown is likely for 2020. These signals may be temporary responses to negative short-term conditions, but historically they have preceded a more widespread downturn.”
The Associated General Contractors of America suggested the number of warm bodies hired by the construction industry should, at least in the near-term, outweigh the cooling economic numbers. The AGC said Jan. 2 that a survey of their contractors found that 79 percent of construction firms plan to expand their payrolls in 2019 - but an almost equal percentage are "worried about their ability to locate and hire qualified workers."The findings are detailed in the AGC's Contractors Remain Confident About Demand, Worried About Labor Supply: The 2019 Construction Hiring and Business Outlook Report.
"Construction executives appear to remain confident about their market prospects for 2019 and plan to add headcount to cope with the added workload," said Stephen Sandherr, the association's chief executive officer. "Even as they are optimistic about growing demand, contractors are concerned about finding qualified workers to execute projects."The AGC's survey from more than 1,300 firms in 49 states found that the percentage of respondents who expect a market segment to expand exceeds the percentage who expect it to contract for all 13 categories of projects included in the survey. The 79 percent of contractors who plan to add staff in 2019 is up from 75 percent at the start of 2018 and 73 percent at the start of 2017. However, just under half of
Following are a few more nuggets from the AGC's contractor survey:
*The labor shortages are having an impact on U.S. construction costs and project schedules. One-third of respondents report that staffing challenges drove costs higher than anticipated. In reaction, 37 percent of firms are putting higher prices into new bids and contracts. And, 34 percent report projects have taken longer than they anticipated.*In response to worker shortages, 59 percent of firms report they increased base pay rates, while 29 percent provided incentives and/or bonuses. Twenty-four percent of firms increased contributions or improved employee benefits to cope with workforce shortages.
*More firms are investing in training for current workers and new hires. Many firms are also investing more in training programs for current and new workers. The survey found that 63 percent of firms report they plan to increase investments in training and development in 2019, up from 52 percent at the beginning of last year.