Constructor - January/February 2018 - 17

SIMONSON SAYS

Contractors Can Expect a Mixed but
Modestly Positive Year Ahead
BY KEN SIMONSON
CHIEF ECONOMIST
AGC OF AMERICA

in 2017 than in 2016. For 2018, contractors
should expect more of the same: overall
growth but with shifting among categories
as some high-fliers turn down while previously lagging segments improve. As always,
a variety of policy uncertainties could cause
the outlook to change without warning.
The prospects for total construction
spending look positive. Economists have
shown an unusual degree of consensus
that the economy, labor force and personal
income will keep growing in 2018. These
trends in turn support demand for most
types of construction.
Total spending put in place increased
6 percent from 2015 to 2016, according to
the Census Bureau. In the first nine months
of 2017 combined, spending rose another
4 percent from the same period of 2016.
The 2018 total should be anywhere from 2
percent to 7 percent higher than the final
figure for 2017.
However, the market is evolving.
Private nonresidential construction spending increased 8 percent in 2016 but only
2 percent through the first three-quarters
of 2017. Growth in 2018 is likely to be
in the 1 percent to 5 percent range. The
biggest gainers will most likely relate to
natural gas: from construction around new
well sites to pipelines; ethane crackers
and other petrochemical plants; gas-fired
power plants; and facilities to liquefy and
export gas. Large numbers of warehouses
and data centers will continue to go up,
but the percentage growth will probably
not match the torrid rates of recent years.
Office growth will similarly remain positive but with a smaller plus-sign than in
2016-17. Within the healthcare category,
there is likely to be ongoing growth in specialized healthcare facilities such as outpatient urgent care, surgical, rehabilitation
@Constr uctor Ma g

©ISTOCK.COM/DNY59

CONSTRUCTION SPENDING GREW
UNEVENLY - and more slowly in total -

and hospice facilities, but not much hospital
construction. The previously hot hotel category may hit saturation and turn negative
in 2018.
Public construction spending edged
down 1 percent in 2016 and fell by a steeper
4 percent in the first nine months of 2017.
The prospects for 2018 are somewhat
brighter, with growth of up to 3 percent
possible, but expansion is likely to be limited to two, or perhaps three, categories.
Public school construction is reviving, as
the increase in property values has led to a
pick up in the property tax receipts and bond
issues that most school districts rely on to
fund projects. There will also be a further
increase in airport construction and renovation, as the number of passengers and flights
has improved the revenue streams airports
use to fund projects, while increasing the
demand for new gates and other facilities.
In addition, highway construction spending may rise, following the enactment of
highway funding increases in the past five
years in a majority of states and the gradual
spread of public-private partnerships for
highway projects. But the timing of highway spending growth remains uncertain,

as Census data through September 2017
show a puzzling 4 percent decrease from
the first nine months of 2016.
Private residential construction spending jumped 11 percent in 2016 and has
maintained that growth rate through
September 2017. The strongest growth
has been in "improvements" - additions
and renovations to existing single- and
multifamily residences. That category will
continue to thrive in 2018 as rebuilding in
the areas affected by hurricanes Harvey
and Irma picks up. As for new construction, single-family spending is likely to
maintain a nearly double-digit growth
rate but multifamily spending is headed
for a flat or slightly negative year, as some
metro areas show signs of overbuilding.
The major uncertainty overhanging
the forecast is the impact of possible tax
restructuring. The construction industry
and various structure types could also
be affected by changes in infrastructure
funding, trade and immigration policies.
However, for now, the outlook for 2018
appears to be for (slightly) more growth in
overall construction, with a mix of pluses
and minuses.
◆

J A N U A R Y / F E B R U A R Y 2 0 1 8 | www.constructormagazine.com 17


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Table of Contents for the Digital Edition of Constructor - January/February 2018

Editor’s Note
President’s Message
CEO’s Letter
Come for the Puppies, Stay for the Mission
Simonson Says
2018 Regulatory Update: AGC Leaves No Stone Unturned
De-Constructing Delays and Disruptions: Task Force Tackles an Ever-Increasing Problem
Workforce Development Is Priority One
Going Up
Technology Toolbox
Improving Safety With Building Information Modeling Technology
Book Shelf
The 99th Annual AGC Convention: Celebrating 100 Years of Construction
Member and Chapter News
Overcoming Permit Delays
2018 Service & Supply Buyers’ Guide – a Special Advertising Section
Products & Services Marketplace
Index to Advertisers
Constructor - January/February 2018 - Intro
Constructor - January/February 2018 - cover1
Constructor - January/February 2018 - cover2
Constructor - January/February 2018 - 3
Constructor - January/February 2018 - 4
Constructor - January/February 2018 - 5
Constructor - January/February 2018 - 6
Constructor - January/February 2018 - Editor’s Note
Constructor - January/February 2018 - 8
Constructor - January/February 2018 - President’s Message
Constructor - January/February 2018 - 10
Constructor - January/February 2018 - CEO’s Letter
Constructor - January/February 2018 - Come for the Puppies, Stay for the Mission
Constructor - January/February 2018 - 13
Constructor - January/February 2018 - 14
Constructor - January/February 2018 - 15
Constructor - January/February 2018 - 16
Constructor - January/February 2018 - Simonson Says
Constructor - January/February 2018 - 18
Constructor - January/February 2018 - 2018 Regulatory Update: AGC Leaves No Stone Unturned
Constructor - January/February 2018 - 20
Constructor - January/February 2018 - 21
Constructor - January/February 2018 - 22
Constructor - January/February 2018 - 23
Constructor - January/February 2018 - 24
Constructor - January/February 2018 - De-Constructing Delays and Disruptions: Task Force Tackles an Ever-Increasing Problem
Constructor - January/February 2018 - 26
Constructor - January/February 2018 - Workforce Development Is Priority One
Constructor - January/February 2018 - Going Up
Constructor - January/February 2018 - 29
Constructor - January/February 2018 - 30
Constructor - January/February 2018 - 31
Constructor - January/February 2018 - 32
Constructor - January/February 2018 - 33
Constructor - January/February 2018 - 34
Constructor - January/February 2018 - Technology Toolbox
Constructor - January/February 2018 - Improving Safety With Building Information Modeling Technology
Constructor - January/February 2018 - 37
Constructor - January/February 2018 - 38
Constructor - January/February 2018 - 39
Constructor - January/February 2018 - 40
Constructor - January/February 2018 - Book Shelf
Constructor - January/February 2018 - 42
Constructor - January/February 2018 - The 99th Annual AGC Convention: Celebrating 100 Years of Construction
Constructor - January/February 2018 - 44
Constructor - January/February 2018 - Member and Chapter News
Constructor - January/February 2018 - Overcoming Permit Delays
Constructor - January/February 2018 - 47
Constructor - January/February 2018 - 48
Constructor - January/February 2018 - 2018 Service & Supply Buyers’ Guide – a Special Advertising Section
Constructor - January/February 2018 - 50
Constructor - January/February 2018 - 51
Constructor - January/February 2018 - 52
Constructor - January/February 2018 - 53
Constructor - January/February 2018 - 54
Constructor - January/February 2018 - 55
Constructor - January/February 2018 - 56
Constructor - January/February 2018 - 57
Constructor - January/February 2018 - 58
Constructor - January/February 2018 - 59
Constructor - January/February 2018 - 60
Constructor - January/February 2018 - 61
Constructor - January/February 2018 - 62
Constructor - January/February 2018 - 63
Constructor - January/February 2018 - 64
Constructor - January/February 2018 - 65
Constructor - January/February 2018 - 66
Constructor - January/February 2018 - 67
Constructor - January/February 2018 - Products & Services Marketplace
Constructor - January/February 2018 - 69
Constructor - January/February 2018 - Index to Advertisers
Constructor - January/February 2018 - cover3
Constructor - January/February 2018 - cover4
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