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Many economic indicators predict growth for the construction industry in 2018.
Following four months of decline, the Dodge Momentum Index saw nearly a 14% rise in November. (The Index is a 12-month indicator of construction spending for nonresidential building.) This rise signals a growth in construction activity through the end of 2017 and into 2018.
Specifically, the Dodge Index projects a 2% increase in commercial building next year. However this is a slowdown compared to 2017, which saw a 3% increase.
“The US construction industry has moved into a mature stage of expansion,” said Robert A. Murray, Dodge Data’s chief economist.
Infrastructure Boost
In May, President Trump submitted a $1 trillion budget proposal for funding infrastructure improvements.
Now the White House has announced that the president will release his infrastructure proposal in early January. After the announcement, the Russell 3000 Building Materials Index gained as much as 2.2%, and closed 1.8% up overall.
An anonymous administration official said that the president aims to release a document detailing “principles” for upgrading roads, bridges, airports, and other public works before the State of the Union address on January 30.
According to a paper put out by Georgetown University, the president’s infrastructure proposal could create as many as 11 million jobs through 2027.
FAA Spending
Airports, which are a segment of public works included in the president’s infrastructure proposal, have already seen increased construction activity that will continue into 2018.
A $4 billion Delta Air Lines terminal redevelopment at LaGuardia broke ground in August. Contractors are rebuilding Terminal B. The first new gates are scheduled to come back online in two years.
And developers are also expanding the number of gates at Denver International Airport. The project will cost $1.5 billion and will add 39 gates through 2021.
In addition to these large-scale improvement projects, the Federal Aviation Administration offers grants for smaller-scale improvements, like replacement lighting and runway repair. As of September, that program has awarded nearly $3 billion out of its $3.35 billion budget.
Skilled Labor Shortage
According to another Dodge Analytics survey, commercial contractors are optimistic about the industry’s health. But that same survey also revealed that the skilled labor shortage and its impact on the industry still need to be addressed. 93% of contractors also say they are concerned about the cost of skilled labor.
General contractors reported difficulty finding skilled laborers in the following fields, ranked from hardest-to-find, to least:
1) Concrete
2) Interior Finishes/Millwork
3) Masonry
4) Electrical
5) Plumbing
6) Plastering/Drywall
7) Steel Erection
8) HVAC
9) Mechanical
Sources: Construction Dive (1), Construction Dive (2), Globest, NY Post, Denver Post, USG Commercial Construction Index
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