The construction industry is poised for significant growth, with several indicators pointing towards a positive trajectory in construction spending. Recent reports and analyses from industry experts provide insights into the current state and future prospects of the sector.
According to a news release from the Associated Builders and Contractors (ABC), national nonresidential construction spending saw a marginal increase of 0.1% in July, reaching a seasonally adjusted annualized basis of $1.08 trillion. This growth comes after a slight dip in the previous spending report, which had marked the end of an 11-month streak of nonresidential spending increases.
Anirban Basu, ABC’s chief economist, commented on the recent figures, stating, “Since nonresidential construction hiring was strong last month, the expectation is that July’s construction spending number will prove to be an aberration.” He further added that the growth in spending is anticipated to remain solid in the coming months. This optimism is fueled by several massive construction projects that are currently in the development phase or have just commenced their early construction stages.
However, it’s not just the ABC that holds a positive outlook for the construction industry. A report from Construction Dive echoes similar sentiments. The article highlights that construction spending levels in July indicate a sustained demand for construction workers and private-sector projects. Ken Simonson, the Chief Economist at the Associated General Contractors of America, mentioned in the group’s report that there is “no letup in demand for construction workers or private-sector projects.”
Despite the overall positive outlook, there are challenges that the industry needs to navigate. Simonson has expressed concerns regarding the progress of many public infrastructure projects. He believes that these projects might be facing delays due to a series of regulatory measures introduced by the Biden administration. He mentioned, “Contractors are frustrated by the slow pace of new public project awards.”
In July, public construction spending saw a decrease of 0.4%, with significant slowdowns observed in major infrastructure categories. For instance, spending on highways and streets reduced by 0.6%, and there were declines of 0.9% and 1.2% in transportation and waste disposal construction, respectively.
However, it’s not all gloomy. The total construction spending, which encompasses housing, witnessed a growth of 0.7% in July. But, when adjusted for inflation, the real terms saw a decline, as pointed out by Basu.
In conclusion, the construction industry is on the brink of significant growth, with numerous projects in the pipeline and a steady demand for construction-related services. While there are challenges to overcome, especially in the public infrastructure domain, the overall outlook remains positive. Industry experts and analysts are optimistic about the future, and with the right strategies and policies in place, the construction sector is set to thrive.