Impressive Growth for the Construction Industry in 2019
A recent Gallup® poll showed that 50% of those surveyed said they were financially better off today than they were a year ago. This is the first time since 2007 the results have been this positive, and it’s being hailed as a post-recession milestone. Skeptics will now scramble to find any bit of contradicting evidence to prove otherwise, including rising gas prices, a volatile stock market, unemployment, the national debt, etc. However, for those 50% of satisfied survey respondents, and I’m sure it’s probably even more, their joy and contentment at the status quo isn’t unfounded. The economy is thriving and there’s no better indicator than the construction market.
Architectural firm services have grown steadily over the past year and 2019 shows further growth in billings, inquiries, and new design contracts. The monthly Dodge Momentum Index from Dodge Data & Analytics, which measures the initial report for nonresidential building projects in planning, shows a rise of 4.7% in January 2019. Additionally, the American Institute of Architects’ Architecture Billings Index score for January jumped up to 55.3, compared to 51.0 in December 2018.
Also, a 3% increase in spending levels over 2018 has been forecast for 2019. Construction job openings in 2018 increased by 282,000, according to the Associated General Contractors of America. The end of the year saw a 25% jump when compared to the previous year, and much of the impressive growth for construction employment is thanks to states in the West. Texas, California, Arizona, Wyoming, Nevada, Oregon, and North Dakota all added an extraordinary amount of construction jobs over the past year. Because of increased demand for construction and architectural services, employees have seen a trickle-down effect to their own paychecks. The industry’s average pay continued to increase throughout 2018 while unemployment decreased to a historic low. This trend isn’t expected to wane in 2019.
Airport, office, healthcare, and school construction are expected to be strong in 2019, and the West can count on increased residential building thanks to steady job and population growth. Millennials are transitioning from renting to owning homes, which is increasing residential construction in areas with high populations of young people, such as the Pacific Northwest, the Rocky Mountains, and Northern California. Mountain states, such as Montana, Idaho, and Utah, can expect particularly large residential gains, according to the National Association of Home Builders.
One giant leap forward for the construction industry is 2018’s Strengthening Career and Technical Education for the 21st Century Act. The legislation is a reauthorization of a 2006 $1.2 billion career and technical education act. The new law allows states to set their own goals for career and technical education programs without the education secretary’s approval, otherwise known as red tape, and requires them to make progress toward these goals. The Career and Technical Education Act is a step in the right direction to help enable workers to get jobs in fields that pay well and have great career advancement opportunities.
At the risk of sounding like a broken record, the one negative factor of such a strong construction market is the continued absence of skilled workers. The new education legislation will surely help the upcoming jobseekers, but the labor industries need a talented workforce immediately. Until this happens, our growth as an industry is at the mercy of the next generation of workers. Thankfully, this upcoming year will see even more investment in construction equipment and software, such as drones and 3D printing. According to Associated Builders and Contractors, this adoption of new technology will help to lessen the burden of the current skill shortage.
The upcoming year looks strong, and the momentum that we’re gaining as an industry doesn’t seem to be slowing down anytime soon. Take this productive time to get organized, train your staff on new technology, and recruit new talent.