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News July 18, 2018

Construction executives optimistic about short-term growth

Engineering News-Record's second-quarter Construction Industry Confidence survey has revealed construction executives are optimistic about the industry's short-term growth despite the labor shortage and increasing materials prices; however, they remain cautious regarding long-term growth, according to www.constructiondive.com. The index's second-quarter reading fell three points to 70, but a mark of 50 or higher still indicates market growth.

Of the 301 construction and design executives responding to the survey, the majority said the industry will continue its growth pattern into 2019. Almost 30 percent of respondents predicted the industry still will be expanding in 12 to 18 months, and 15 percent said the market will be declining by then. However, only 16 percent said the construction industry would be in a growth mode in three years, and 35 percent predict a contraction.

Materials price pressure is affecting 86.4 percent of respondents—a more than 12 percent increase compared with the first quarter—as the U.S. tariffs have led to steel prices becoming a major concern for most. Less than 7 percent of survey participants said the labor shortage had improved since 2017, and more than 47 percent said the shortage was somewhat worse. More than 14 percent said the shortage was much worse.

The results of the latest, not yet released Confindex survey of CFOs conducted by the Construction Financial Management Association seem to indicate an even greater optimism. However, rising interest rates and the prospect of higher project financing costs are a concern to many.

A recent report from the Equipment Leasing and Finance Foundation said residential and commercial construction markets should continue to grow by at least 5 percent through the end of 2018. The foundation also predicted resiliency; the labor shortage; the effects of automation and technology on productivity and safety; building information modeling; artificial intelligence; big data; and significant policy regulations will be trending industry concerns during 2018.

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