A nationwide survey found 75% of construction firms plan to expand their payrolls in 2018 as contractors appear optimistic that economic conditions will remain strong amid falling tax rates and regulatory burdens.
The survey, titled Expecting Growth to Continue: The 2018 Construction Industry Hiring and Business Outlook (.pdf), was conducted by the Associated General Contractors of America and Sage Construction and Real Estate.
AGC of America recently reported a growth of 30,000 jobs in Dec., driving employment to its highest level since September 2008. Employment totaled 6,993,000 at the end of the month which represents a 3.1% increase for 2017. The unemployment rate in construction dropped to 5.9% last month from 7.4% a year earlier. The rate and number of unemployed were the lowest for Dec. in the 17-year history of the series.
“Construction firms appear to be very optimistic about 2018, as they expect demand for all types of construction services to continue to expand,” Stephen E. Sandherr, the association's CEO, said in a news release. “This optimism is likely based on current economic conditions, an increasingly business-friendly regulatory environment and expectations the Trump administration will boost infrastructure investments.”
The private office market segment expressed the brightest outlook with a 22% net positive reading in the survey. The other transportation and retail, warehouse and lodging segments each netted a 21% positive reading. Water and sewer construction netted 20%, K-12 construction 18%, and highway and hospitality each 17%.
The net positive reading for all types of construction registered 44%.
The survey found that 75% of firms plan to expand, up from 73% last year. Half of the firms report their expansion plan to increase by 10% or less, and only 5% of firms plan to increase by more than 25%.
Only 3% of respondents expect to shrink their firms, down from 6% last year.
Despite the optimism, some companies reported they are worried about workforce shortages and infrastructure funding. The survey found 82% of firms expect it will either become harder or remain difficult to recruit and hire qualified workers in 2018, up from 76% last year.
“While workforce issues remain their top concern, many contractors are also worried about competition and the impact of decisions made in Washington on their operations,” said Ken Simonson, the association's chief economist. He noted that 39% of firms said increased competition for projects was one of their biggest concerns for the year.
Federal regulation represented a top concern for 28% of companies, and 24% cited a lack of new infrastructure investments.
Statistics were similar for the South region (.pdf).
The survey showed that firms are addressing the workforce shortage by increasing base pay rates, providing incentives and bonuses and contributing more to employee benefits.
“The administration must also deliver on its promise to boost investments in infrastructure,” Sandherr said, adding the association has been pushing for new investments. “As long as federal officials continue to work to boost infrastructure investments, reduce regulations and support workforce development, 2018 will be a strong year for the construction industry.”