Nonresidential construction spending exceeded economist expectations for 2015 and is forecast to continue its upward climb through 2016 before slowing slightly in 2017, according to the AIA’s latest semi-annual Consensus Construction Forecast released today. The survey of the country’s leading construction market forecasters projects growth of 8.3 percent for nonresidential building in 2016 and 6.7 percent for the category in the following year.
High demand for hotels, offices, manufacturing facilities, and recreation spaces, in particular, will continue to drive spending this year, the report finds. “While rising interest rates could pose a challenge to the U.S. economy, lower energy prices, improved employment figures and an enacted federal budget for 2016 are all factoring into a very favorable outlook for the construction industry,” said AIA chief economist, Kermit Baker, Hon. AIA, in a press release. He adds that the institutional project sector has recovered and is now on "very solid footing."
Source: AIA Consensus Construction Forecast
The report follows (and echoes the sentiments of) last week’s release of two key, monthly economic indicators focused on employment and hiring—one from payroll processing company ADP and its partner Moody’s Analytics and the other from the Bureau of Labor Statistics. Both sets of reports found strength in the construction sector, with hiring continuing to recover from a sluggish fall, and that employment gains were the strongest across all markets among businesses with fewer than 500 employees.
Next week's release of the AIA's Architectural Billings Index should shed more light on how architecture and design firms, specifically, are faring as a result of the continued growth in commercial construction spending and hiring gains in the architecture and construction sectors.