With the end of the recent recession, all facets of the economy have experienced upturns. This especially holds true for the construction industry, which has gone through quite a few major expansions in recent years. CEO of Summit Materials, Tom Hill, spoke in an interview with TheStreet about recent progress in the industry.
According to Hill, “We are in the early innings of a construction market recovery.” Hill’s company, Summit Materials, supplies concrete, asphalt, and other construction materials. Shares of Summit Materials have increased 10% so far in 2016 and are expected to continue to grow throughout the year. The reason for this is that demand for construction has drastically increased since the recession. Residential construction, which fuels the concrete business, is currently booming due to increased producer and consumer confidence in the construction industry. Hill stated that “the Portland Cement Association, or PCA, forecasts total housing starts to accelerate to 1.53 million in the U.S. by 2019, 38% higher than in 2015” – Greg Greenberg, TheStreet.
When the recession hit in 2008, many contractors were forced to abandon their projects and millions of dollars were lost. Because of this, companies ceased new projects, fearful of loss. As a result, the construction industry took a major downturn. With confidence restored in recent years, firms have begun to open new construction projects, leading to a recovery in the market.
Government Spending Increase
The FAST act, the first long-term transportation bill in decades, provided a major boost to government spending on public-works projects. Because of the FAST act, transportation funding will increase by 5.1% this year. As a result of this increased spending, the PCA expects spending on public infrastructure to grow about 12% between 2014 and 2017. Increased government investment in infrastructure is indicative that the construction industry, that will be in charge of fulfilling the new demand, will soon experience sharp upturns. As more projects begin their journey to completion, individuals in the construction industry will be patiently waiting to fulfill every need.