Associated Builders and Contractors (ABC) forecasts a slowdown of growth in the U.S. commercial and industrial construction industries in 2017. While contractors are vulnerable to rising commodity prices and potential interest rate increases in 2017, the middling consumer-led recovery should still lead to modest growth in construction spending and employment.
“The U.S. economy continues to expand amid a weak global economy and, despite risks to the construction industry, nonresidential spending should expand 3.5 percent in 2017,” says ABC Chief Economist Anirban Basu in a press release. “For more than two years, the Federal Reserve has been able to focus heavily on stimulating economic growth and moving the nation toward full employment. However, as commodity prices, including energy prices, firm up and labor costs march higher, the Federal Reserve will need to be more concerned about rising inflation expectations going forward.
“Contractors also should be prepared for increases in commodity prices, which could translate into further stagnation in construction spending volumes if the purchasers of construction services are not prepared for related cost increases,” warns Basu.
However, the average age of all fixed assets, including structures like factories and hospitals, currently stands at 23 years, which is the oldest on record dating back to 1925. Most enterprises realize they will need to replace a lot of their capital stock in the near future, meaning there is a bullish scenario that could take place.
Basu’s full forecast is available in the December issue of ABC’s Construction Executive magazine, along with the regional outlook for commercial and industrial construction by Dr. Bernard Markstein, president and chief economist of Markstein Advisors, who conducts state-level economic analysis for ABC.
Related Stories
Student Housing | Feb 21, 2024
Student housing preleasing continues to grow at record pace
Student housing preleasing continues to be robust even as rent growth has decelerated, according to the latest Yardi Matrix National Student Housing Report.
Architects | Feb 21, 2024
Architecture Billings Index remains in 'declining billings' state in January 2024
Architecture firm billings remained soft entering into 2024, with an AIA/Deltek Architecture Billings Index (ABI) score of 46.2 in January. Any score below 50.0 indicates decreasing business conditions.
Multifamily Housing | Feb 14, 2024
Multifamily rent remains flat at $1,710 in January
The multifamily market was stable at the start of 2024, despite the pressure of a supply boom in some markets, according to the latest Yardi Matrix National Multifamily Report.
Student Housing | Feb 13, 2024
Student housing market expected to improve in 2024
The past year has brought tough times for student housing investment sales due to unfavorable debt markets. However, 2024 offers a brighter outlook if debt conditions improve as predicted.
Contractors | Feb 13, 2024
The average U.S. contractor has 8.4 months worth of construction work in the pipeline, as of January 2024
Associated Builders and Contractors reported today that its Construction Backlog Indicator declined to 8.4 months in January, according to an ABC member survey conducted from Jan. 22 to Feb. 4. The reading is down 0.6 months from January 2023.
Industry Research | Feb 8, 2024
New multifamily development in 2023 exceeded expectations
Despite a problematic financing environment, 2023 multifamily construction starts held up “remarkably well” according to the latest Yardi Matrix report.
Market Data | Feb 7, 2024
New download: BD+C's February 2024 Market Intelligence Report
Building Design+Construction's monthly Market Intelligence Report offers a snapshot of the health of the U.S. building construction industry, including the commercial, multifamily, institutional, and industrial building sectors. This report tracks the latest metrics related to construction spending, demand for design services, contractor backlogs, and material price trends.
Industry Research | Jan 31, 2024
ASID identifies 11 design trends coming in 2024
The Trends Outlook Report by the American Society of Interior Designers (ASID) is the first of a three-part outlook series on interior design. This design trends report demonstrates the importance of connection and authenticity.
Apartments | Jan 26, 2024
New apartment supply: Top 5 metros delivering in 2024
Nationally, the total new apartment supply amounts to around 1.4 million units—well exceeding the apartment development historical average of 980,000 units.
Self-Storage Facilities | Jan 25, 2024
One-quarter of self-storage renters are Millennials
Interest in self-storage has increased in over 75% of the top metros according to the latest StorageCafe survey of self-storage preferences. Today, Millennials make up 25% of all self-storage renters.