Equipment World Digital Magazine
Issue link: http://read.dmtmag.com/i/305391
EquipmentWorld.com | May 2014 11 reporter | by Equipment World staff T he outlook from respected economists in the construction industry continues to be mixed. All the elements for growth are there but several factors could limit or hurt the industry's ongoing recovery. During a recent webinar, Bernard Markstein, chief economist at Reed Construction Data; Kermit Baker, chief economist at the American Institute of Archi- tects and Ken Simonson, chief economist at Associ- ated General Contractors of America, focused on the outlook for 2014 and beyond. Markstein said the industry has shown clear evidence of economic improvement but notes that things could be better, alluding to what the three economists said was a disappointing 2014 fi rst quarter. Whether or not this winter's harsh weather played a big role in the so-so numbers in construc- tion spending, employment and home starts, Mark- stein said, "My view and the view of others is that there will be a bounce back." Simonson called the recovery "pretty steady but awfully gentle," and though he has concerns, he expects construction spending to grow be- tween 6 and 10 percent in 2014, saying he believes it will be closer to 10 per- cent, expecting that type of growth through 2017. Simonson also forecasts labor costs to rise be- tween 2.5 and 5 percent with materials costs grow- ing from 1 to 3 percent through 2017. Simonson expects "another year of gradual decline in government construction spending," noting that the sector has "continued to cut back on money it puts into discre- tionary accounts, notably construction." He also identifi ed his best bets for growth this year: multifamily housing, manufacturing (espe- cially petrochemical), oil and gas projects, pipe- lines, warehouses, hotels and resorts, rail, and data centers. Jobs added The latest numbers from March show construction employment at 5.964 million Americans, according to preliminary Bureau of Labor Statistics data. Baker said he would like to see the industry average 20,000 net new positions each month. In 2013, the industry added 156,000 jobs, an average of 13,000 per month. There were a lot of ups and downs in 2013 with a few months of gains before a loss typically followed by a large gain. So far in 2014, 88,000 jobs have been added, an average of 29,300 per month largely due to January's boost of 51,000 jobs. "It looks like we're getting close to what we'd like to see in terms of the trend line in adding jobs in the construction sector," Baker said. Simonson Despite slow start to 2014 and concerns, top construction economists predict growth