Like the weather across much of the country, construction is heating up this summer with good indicators for sustained growth. There’s no question that the last decade has been tumultuous for the construction sector. Both residential and non-residential building have had several ups and downs on the road to recovery from the recent recession. But with new opportunities on the horizon, there are several signs that construction is staged to come back strong in the second half of 2017 and beyond.
Perhaps the greatest indicator of growth is the Architecture Billings Index. According to the American Institute of Architects (AIA), June topped five consecutive months of increasing demand for architectural services. This initial activity suggests that more projects are in the early stages of development across the nation.
“So far this year, new activity coming into architecture firms has generally exceeded their ability to complete ongoing projects,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “Now, firms seem to be ramping up enough to manage these growing workloads.”
The U.S. Census confirmed strong building activity in a recent report. The report revealed that applications for residential building permits jumped 7.4% in June over May and 5.1% over the previous year. The report also noted that housing starts have similarly climbed month over month and year over year.
Non-residential building is increasing too. The Dodge Momentum Index by Dodge Data and Analytics climbed 1.1% in June. According to Dodge, “The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.”
The most recent report indicated that institutional construction was the leading factor behind the increase with a 4.8% bump, while commercial building dropped 1.3%. Despite the June drop, both commercial and institutional building have grown substantially since the same time last year with gains of 11.8% and 9.5% respectively.
Similarly, ConstuctConnect’s Expansion Index confirmed the likelihood of steady and sustained growth. The Index, which rates 378 markets across the U.S., revealed that 65% of those markets show moderate to significant expansion. Central Pennsylvania, Southern Ohio/Northern West Virginia and South Texas are among the hottest construction markets in the nation.
Transportation infrastructure is another area likely to see positive growth. A mid-year report by Fitch Ratings said that airports and ports will see strong activity through the end of the year. Fitch also suggested that toll roads will grow at a slower rate while state and local government projects remain on hold due to uncertainty regarding federal funding.
With several promising indicators, the outlook is good for construction in the Trump White House era. Regardless of which side of the political isle you may fall, most agree that when construction is doing well, so is the U.S. economy as a whole.