Despite a growing list of economic concerns, the consensus among top analysts is that construction spending will remain strong across both the government and private sector heading into 2019. Not only was construction spending up overall in 2018, but there are many areas that are showing significant growth. Forecasts also call for much of the same heading through 2019 despite several challenges.
Construction Spending Hits Record High in 2018
The latest government figures released by the Associated General Contractors of America reveals that construction spending increased to a record high of $1.329 trillion. This was an annualized figure for the first nine months of 2018, and it represents a 5.5 percent growth rate over the prior period. For government construction alone, the growth rate was 7.0 percent.
The association’s chief economist, Ken Simonson, reports that spending has increased in nearly every geographic area and project type. Some of the public segments with the largest growth include transportation (15.8 percent), highway (5.8 percent), and education (2.0 percent). Other nonresidential segments that showed growth include office (7.4 percent), commercial (4.8 percent), and manufacturing (3.4 percent).
FMI’s Third Quarter Construction Outlook Report had similar figures. It predicted that 2018 would end with certain nonresidential segments outperforming others. Among the top spaces for spending in 2018 include transportation (+13 percent), public safety (+10 percent), and development and conservation (+10 percent). A few of the worst-performing segments include religious (-4 percent), and power (+4 percent).
Areas of Concern Heading into 2019
According to both the FMI and AIA latest reports, there are still several areas of concern for the construction sector. These include:
- A nine-year economic expansion that has run much longer than the average.
- The ability to attract new workers to the construction industry.
- Rising interest rates that are predicted to continue over the next year.
- Threat of an escalating trade war that could drive up materials prices further.
- Rising inflation that impacts both land and materials costs.
Overall Conditions Remain Positive for Construction Spending
Even with the challenges in place, most analysts agree that construction spending will either increase or remain at the current robust levels. The AIA Consensus Construction Forecast Panel projects a 4.7 construction growth rate for 2018 and a 4.0 percent rate for 2019.
Dodge Data & Analytics predicts that construction starts in the U.S. will equal $807 billion in 2018 and increase to $808 billion in 2019. According to Moody’s, global construction revenue is expected to jump 5 percent in the coming year and 6 percent in North America.
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If 2019 marks the year that your organization is ready to move forward with a new project, consider K-Con, Inc. for your commercial and government construction needs. We are a design-build contractor that specializes in pre-engineered metal buildings that can fulfill a variety of requirements.
We work closely with both government agencies and private companies throughout the U.S. and its territories. Contact us now to discuss your project and be sure to ask about our quick turnaround for preliminary pricing and drawings.