To help you plan for 2019, we’ve compiled some of the top takeaways from this year’s report.
Industry forecast: Breaking down the 2019 Dodge Construction Outlook
Dodge Data & Analytics — a trusted provider of construction market intelligence — recently released their 2019 Dodge Construction Outlook. The comprehensive annual report forecasts what to expect in the construction industry in the coming months and beyond.
1. New construction starts in 2019 should hold steady with 2018
According to the report, total construction starts in 2019 will rise to $808.3 billion, up from $806.8 billion in 2018. In dollar terms, nonresidential building will stay at its current level, residential building will decrease 2%, and non-building construction (highways, bridges, environmental public works, etc.) will increase 3%, the report found.
This stabilization follows increases ranging from 11% to 14% each year from 2012 through 2015, 7% increases in both 2016 and 2017, and 3% in 2018, according to the report.
2. However, the pattern varies by specific construction segment
As laid out by Dodge Data & Analytics, construction segments will see the following changes:
Manufacturing plant construction
Public works construction
Electric utilities and gas plants
3. Material prices will continue to rise
According to Construction Dive, material prices rose almost 9% from May 2017 to May 2018 — the biggest annual increase in seven years. Additionally, recent U.S. tariffs on Chinese goods have the potential to drive material prices up and increase inflationary pressures.
However, in the presentation of this year’s report, Dodge’s Chief Economist Robert A. Murray argued that these headwinds shouldn’t draw concern for now.
“There are, of course, mounting headwinds affecting construction, namely rising interest rates and higher material costs, but for now these have been balanced by the stronger growth for the U.S. economy, some easing of bank lending standards, still healthy market fundamentals for commercial real estate, and greater state financing for school construction and enhanced federal funding for public works,” he said.
It seems clear that the 2019 construction year will see a slight shift from the commercial and residential building highs of the past several years to a focus on improving the country’s infrastructure and public buildings. This is an expected change and a rational response to current needs in the U.S. However, these shifts appear to balance out to a near net zero impact on the country’s construction spend overall.
It’s important to remember that these statistics are merely informed predictions — not certainties. However, in a world rife with headlines predicting recession with little basis in concrete fact, it’s reassuring to know that the experts believe 2019 will continue to be a strong year for the construction industry.
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