Expectations of continued private office construction is one of the main factors driving a particularly positive building outlook for 2018, according to a just-released extensive survey of contractors across the country.
“Construction firms appear to be very optimistic about 2018 as they expect demand for all types of construction services to continue to expand,” said Stephen Sandherr, the chief executive officer of the Associated General Contractors of America in a press conference this week.
In introducing AGC’s latest member survey, entitled Expecting Growth to Continue: The 2018 Construction Industry Hiring and Business Outlook, Sandherr took note of an industry-wide mood of buoyancy reaching across nearly all markets.
“This optimism applies to both private and public sector construction demand,” he said, “perhaps reflecting current economic conditions, an increasingly more business-friendly regulatory environment, and expectations that the Trump Administration will finally deliver on its promise to boost infrastructure investment.”
According to the survey, which was conducted between early November and mid-December and included the perspectives of more than 1,000 large, medium, and small firms, at least 75 percent of contractors are planning to hire more employees this year.
That number is up from the 73 percent of firms nationally who last year at this same time were planning to increase their staff sizes.
“Most of the hiring will only expand headcounts by a small percentage per firm,” said Kenneth Simonson, chief economist with AGC.
“Half of the firms report their expansion plans will increase the size of their firms by 10 percent or less,” continued Simonson, while “only 5 percent of firms report plans to expand their headcount by at least a quarter.”
Simonson noted, in fact, that the industry’s job growth has been underway for some time, pointing to Department of Labor data indicating that between November of 2016 and November of last year, construction employment increased in 255 out of 358 metro areas nationally.
The AGC survey also revealed growth in specific areas with respondents, said Simonson, most optimistic about construction opportunities in the private office segment.
Respondents additionally indicated that they expect to see a 33 percent increase in transit, rail, and airport construction over last year; a 32 percent increase in retail, warehouse, and lodging work; and a 31 percent increase in water and sewer construction projects.
Other segments, including manufacturing, K-12 schools, hospitals, and multifamily residential, are all expected to see increases in project dollar volume this year, comprising an overall 53 percent expectation of all projects for 2018 over 2017.
But despite such upbeat expectations, the construction industry continues to grapple with one big challenge: Growing workforce shortages, said Sandherr, “have continued to make it difficult for the mass majority of firms to find and hire qualified workers.”
As a result, many of those same firms “are opting to recruit works with less experience and skills than they would prefer,” he said.
In fact, a strong 50 percent of the survey’s respondents agreed with the statement that they are “having a hard time filling both salaried and craft worker positions,” compared to only 9 percent who said they were having no trouble filling those positions.
Perhaps not surprisingly, an even larger 53 percent of respondents said they think it will remain hard in 2018 to find and hire qualified construction workers, versus only 5 percent who said it will either “continue to be easy” or will become easier.
In an effort to hold onto the good workers they already have, some 60 percent of responding firms indicated that they have increased base pay rates, a significant jump over the 50 percent doing so last year.
At the same time, 36 percent of firms questioned have in the last year provided incentives or bonuses to their employees, with 24 percent either increasing contributions or improving employee benefits to cope with workforce shortages.
The AGC survey, done in conjunction with the Washington-based Sage Construction and Real Estate, is regarded as one the most comprehensive overviews of both construction trends and labor market conditions in the country.
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