Consensus Forecast: Nonresidential construction spending to rise 8% in 2016
- The American Institute of Architects' semi-annual Consensus Construction Forecast predicted that nonresidential spending will increase approximately 8.3% in 2016 and 6.7% in 2017.
- The report noted that 2015 nonresidential construction spending exceeded expectations and predicted this year should also see significant demand for hotels, office space, manufacturing facilities and amusement and recreation spaces.
- The AIA Consensus Construction Forecast Panel projects construction business conditions for the next 12 to 18 months. The panel includes forecasts from Dodge Data & Analytics, Wells Fargo Securities, IHS-Global Insight, Moody’s economy.com, CMD Group, Associated Builders & Contractors, and FMI.
"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," AIA Chief Economist Kermit Baker said in a statement.
He added that the institutional construction segment "if finally on very solid footing" after several disappointing years.
Gilbane Building’s Winter 2015-2016 Market Conditions in Construction report this week found the 2015 surge in spending was driven by nonresidential construction, with growth at 10.7%, to $1.1 trillion, for 2015. Gilbane predicted spending will rise 9.7% in 2016 and that total construction spending growth from 2014 to 2016 may reach 30% — a new record.
Of course, no discussion of increased construction spending is complete without a mention of the ongoing concern over adequate supplies of skilled labor. Gilbane said the lack of skilled workers has driven up home prices and could lead to higher wage rates.