Despite a weak global economy, the industry's solid economic recovery in 2015 should continue in 2016, led by strong consumer spending, according to the 2016 construction industry forecast from the Associated Builders and Contractors (ABC).
The group forecasts growth in nonresidential construction spending of 7.4% next year, along with growth in employment and backlog.
"The mid-phase of the recovery is typically the lengthiest part and ultimately gives way to the late phase, when the economy overheats,” ABC Chief Economist Anirban Basu said. "Already, signs of overheating are evident, particularly with respect to emerging skills shortages in key industry categories such as trucking and construction."
Basu said that average hourly earnings across all industries are up only 2% in the past year, below the Federal Reserve's goal of 3.5%. Purchase prices in real estate and technology segments are rocketing higher and capitalization rates remain unusually low.
According to the most recent ABC Construction Confidence Index, overall contractor confidence has increased with respect to both sales (67.3 to 69.4) and profit margins (61 to 62.9). While the pace of hiring is not expected to increase rapidly during the next six months, largely because of the lack of suitably trained skilled personnel, the rate of new hires will continue at a steady pace.
ABC's Construction Backlog Indicator also signals strong demand. According to the latest survey, average contractor backlog stood at 8.5 months by mid-year 2015, with backlog surging in the western United States and the heavy industrial category.
Basu's full forecast is available in the December edition of ABC's Construction Executive magazine, along with the regional outlook for commercial and industrial construction by economist Bernard Markstein, PhD. Free subscriptions are available to construction industry professionals.
Related Stories
Giants 400 | Jan 23, 2024
Top 70 Medical Office Building Construction Firms for 2023
PCL Construction Enterprises, Swinerton, Skanska USA, Clark Group, and Hensel Phelps top BD+C's ranking of the nation's largest medical office building general contractors and construction management (CM) firms for 2023, as reported in the 2023 Giants 400 Report.
Giants 400 | Jan 22, 2024
Top 60 Outpatient Facility Construction Firms for 2023
DPR Construction, PCL Construction Enterprises, The Whiting-Turner Contracting Company, Skanska USA, and Power Construction top BD+C's ranking of the nation's largest outpatient facility general contractors and construction management (CM) firms for 2023, as reported in the 2023 Giants 400 Report. Note: This ranking includes construction revenue for work related to outpatient medical buildings, including cancer centers, heart centers, urgent care facilities, and other medical centers.
Construction Costs | Jan 22, 2024
Construction material prices continue to normalize despite ongoing challenges
Gordian’s most recent Quarterly Construction Cost Insights Report for Q4 2023 describes an industry still attempting to recover from the impact of COVID. This was complicated by inflation, weather, and geopolitical factors that resulted in widespread pricing adjustments throughout the construction materials industries.
Transit Facilities | Jan 22, 2024
Top 25 Transit Facility Construction Firms for 2023
The Walsh Group, Clark Group, Hensel Phelps, Skanska USA, and Hill International top BD+C's ranking of the nation's largest transit facility general contractors and construction management (CM) firms for 2023, as reported in the 2023 Giants 400 Report. Note: This ranking includes construction revenue for work related to bus terminals, rail terminals, and transit stations.
Hotel Facilities | Jan 22, 2024
U.S. hotel construction is booming, with a record-high 5,964 projects in the pipeline
The hotel construction pipeline hit record project counts at Q4, with the addition of 260 projects and 21,287 rooms over last quarter, according to Lodging Econometrics.
Modular Building | Jan 19, 2024
Virginia is first state to adopt ICC/MBI offsite construction standards
Virginia recently became the first state to adopt International Code Council/Modular Building Institute off-site construction standards.
Modular Building | Jan 19, 2024
Building with shipping containers not as eco-friendly as it seems
With millions of shipping containers lying empty at ports around the world, it may seem like repurposing them to construct buildings would be a clear environmental winner. The reality of building with shipping containers is complicated, though, and in many cases isn’t a net-positive for the environment, critics charge, according to a report by NPR's Chloe Veltman.
Sponsored | BD+C University Course | Jan 17, 2024
Waterproofing deep foundations for new construction
This continuing education course, by Walter P Moore's Amos Chan, P.E., BECxP, CxA+BE, covers design considerations for below-grade waterproofing for new construction, the types of below-grade systems available, and specific concerns associated with waterproofing deep foundations.
Sponsored | Performing Arts Centers | Jan 17, 2024
Performance-based facilities for performing arts boost the bottom line
A look at design trends for “budget-wise” performing arts facilities reveals ways in which well-planned and well-built facilities help performers and audiences get the most out of the arts. This continuing education course is worth 1.0 AIA learning unit.
Affordable Housing | Jan 16, 2024
Construction kicks off on $237.9 million affordable housing project in Brooklyn, N.Y.
Construction recently began on an affordable housing project to create 328 units for low-income and formerly homeless populations in Brooklyn, N.Y.