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
Market Data | Aug 3, 2020
Construction spending decreases for fourth consecutive month in June
Association officials warn further contraction is likely unless federal government enacts prompt, major investment in infrastructure as state and local governments face deficits.
Market Data | Aug 3, 2020
6 must reads for the AEC industry today: August 3, 2020
The future is a number game for retail and restaurants and 5 reasons universities are renovating student housing.
Market Data | Jul 31, 2020
5 must reads for the AEC industry today: July 31, 2020
Vegas's newest resort and casino is packed with contactless technology and Mariott, Hilton, and IHG dominate the U.S. hotel construction pipeline.
Market Data | Jul 30, 2020
Marriott, Hilton, and IHG continue to dominate the U.S. hotel construction pipeline at Q2’20 close
Hilton’s Home2 Suites and IHG’s Holiday Inn Express continue to be the most prominent brands in the U.S. pipeline.
Market Data | Jul 30, 2020
7 must reads for the AEC industry today: July 30, 2020
Millennium Tower finally has a fix and construction costs decrease for the first time in 10 years.
Market Data | Jul 29, 2020
62% of metros shed construction jobs from June 2019 to June 2020 as Association calls for new infrastructure funding, other relief steps
New York City and Brockton-Bridgewater-Easton, Mass. have worst 12-month losses, while Austin and Walla Walla, Wash. top job gainers.
Market Data | Jul 29, 2020
6 must reads for the AEC industry today: July 29, 2020
The world's first net-zero airport and California utility adopts climate emergency declaration.
Market Data | Jul 28, 2020
For the fourth consecutive quarter, Los Angeles leads the U.S. hotel construction pipeline at the close of Q2’ 20
New York City continues to have the greatest number of projects under construction, with 106 projects/18,354 rooms.
Market Data | Jul 28, 2020
6 must reads for the AEC industry today: July 28, 2020
St. Petersburg Pier reconstruction completes and post-pandemic workplace design will not be the same for all.
Market Data | Jul 28, 2020
Senate Republicans' coronavirus relief measure includes provisions that will help hard-hit construction firms recover
The HEALS Act includes essential liability, workforce, financial & unemployment reforms, but association will work to get needed infrastructure investments included in final relief measure.