Every construction segment is poised for growth in 2014, including 7.6 percent growth in non-residential construction and 6.3 percent growth in industrial construction, according to the AIA Consensus Construction Forecast.
Hotel construction is showing the most strength, with an expected bump of 15 percent this year. Even public safety construction, which shrank nearly 5 percent in 2013, is expected to climb 1.0 percent in 2014.
“Our outlook is positive, with a few caveats,” says Robert Murray, chief economist at McGraw-Hill Construction in an article in Engineering News Record. “This is another step on the way to a more full-fledged expansion,” he adds. “Because this is a measured expansion, there is a very good chance this forecast will play out.”
The Associated Builders and Contractors Contractor Confidence Index (CCI) showed increases in 2013 and hope for 2014. The CCI for sales expectation for the first half of 2013 was 63; for profit margins was 55.3; and for staffing level was 60. Read more about the CCI here.
“As the economic recovery enters its fifth year, nonresidential construction prospects continue to brighten,” said ABC Chief Economist Anirban Basu. “A variety of industries ranging from professional and health services to leisure and retail continue to add jobs, and vacancy rates in many product categories throughout the country are falling, creating new opportunities for developers and their contractors.”
Not all signs were positive, of course. For example, the federal government’s continued difficulty in developing a budget is not helping the construction economy. This particularly affects construction of bridges, roads, and other infrastructure.
“Over the past 10 years, on average nationally, federal funding has provided 52 percent of the money invested by state transportation departments in road and bridge capital improvement projects,” says American Road & Transportation Builders Association (ARTBA) Chief Economist Dr. Alison Premo Black. “The federal share ranges from 35 percent in New Jersey to over 70 percent in 11 states.”
Nevertheless, ARTBA is forecasting that the overall U.S. transportation infrastructure construction market will grow 5 percent, from $129 billion in 2013 to $135.8 billion in 2014. Read more from ARTBA.
The bottom line? Growth is not rapid, but it is steady, which may be better in the long run.
Says McGraw-Hill’s Murray: “The way the recovery is unfolding is beneficial for two reasons: It lessens the chance of another boom-then-bust cycle, and it allows for labor constraints to be not as severe.”