Construction Industry Outlook 2017

There are many sectors that make up the construction industry, and analyzing all of them can be time consuming and overwhelming. To help you have a better overall view of the industry, we have collected information about construction sector performance and expected growth opportunities.

The construction industry dropped with the 2008 market crash but has seen remarkable growth in the years following. In 2016 however, the rate of growth appeared to have slowed but not stopped completely. Experts within the industry were concerned that 2016 was the start of a cyclical decline and that perhaps the construction expansion may have run its course.  This idea was dismissed after realizing that 2015 had unusually elevated activity from which the 2016 analysis was based. So 2016, in comparison to 2015 year-to-date, seemed as if it was lagging. However at the end of 2016, the year-to-date shortfall became smaller and smaller. Industry analyzers believe that construction spending will see moderate gains through 2017, and total construction starts will increase approximately 5%. This is lower than the 2015 gains of 11% but higher than 2016’s close of approximately 1%.

2017 Construction Starts by Sector:

Single family housing: will rise 12% in dollars which corresponds to a 9% increase in units to 795,000. The increase may be contributed to older-aged members of the millennial generation who are now buying single family housing units.

Multifamily housing: dollar amount will remain flat which corresponds to a 2% decrease in units to 435,000. This sector was extremely inflated in 2015 by exceptional amounts of activity in New York, but it has since declined to a level ground.

Commercial building: will increase 6% which is down from the 12% growth of 2016. Office and store construction are steadily working their ways out of very low periods. Warehouse construction will continue to grow rapidly which can be contributed to the increase of web-based sales that require distribution centers; logistics has become an art form. Hotel construction has remained strong over the past couple years but may begin to retreat since the advancement of companies like Airbnb.

Institutional building: will advance 10% after a period of no growth between 2015 and 2016. School construction will support this advancement through the recent passage of school construction bond measures. The construction of amusement facilities and transportation terminals will also play a role in the increase of institutional building construction.

Manufacturing plants: will increase 6% and recover from the extreme decline between 2015 and 2016 which reflected the pullback of large petrochemical plant construction starts. The new Trump administration has proposed to lower corporate taxes and to encourage companies to bring their foreign profits home. This means that there will be more available funds for new capital projects in the U.S.

Public works: will increase 6% after falling 3% in 2016. The new federal transportation bill will help increase the construction of highways and bridges while the Water Resources Development Act will benefit environmental works. Gas and oil pipeline projects will remain steady.

Electric utilities and gas plants: will fall a staggering 29% following a decline of 26% in 2016. New liquefied natural gas export terminals in Louisiana and Maryland increased construction in 2015 but has fizzled over the past year. Power plant construction will also fall as new generating capacity comes to life.

DATA SOURCES: DODGE DATA & ANALYTICS OUTLOOK REPORT & CONSTRUCTCONNECT’S US CONSTRUCTION OUTLOOK 2017

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