The construction industry should see moderate growth in 2018, but various factors—such as whether an infrastructure funding bill will pass Congress this year—are still unclear.
Dodge Data & Analytics, a Chicago-based firm specializing in analytics and software-based workflow integration solutions for the construction industry, said in its 2018 Dodge Construction Outlook that it expects the value of construction starts to increase 3 percent over 2017 to $765 billion.
"The U.S. construction industry has moved into a mature stage of expansion," said Robert Murray, chief economist for Dodge Data & Analytics, in connection with the 2018 Outlook.
After rising 11 to 13 percent annually from 2012 to 2015, construction starts climbed only 5 percent in 2016, according to Murray.
Multifamily housing and hotels pulled back in 2017 from their 2016 levels, he said, while single-family housing, offices and warehouses had strong starts last year, as did transportation terminals, schools and health care facilities, he said.
Dodge broke down its 2018 projections as follows:
- Single-family housing starts will rise 7 percent to 850,000. "Continued employment growth has eased some of the caution shown by potential home buyers, while older Millennials in their 30s are helping to lift demand for single-family housing," Dodge said.
- Multi-family housing starts will fall 11 percent to 425,000. "This project type appears to have peaked in 2016, helped by widespread growth across major metropolitan markets," Dodge said.
- Commercial building activity will grow 2 percent in 2018, compared with 3 percent in 2017 and a whopping 21 percent in 2016. Office construction should be strong, but store and hotel construction should remain weak in the wake of the 2016 boom, according to the company.
- Institutional building, which leaped 14 percent in 2017, will fall back to 3-percent growth in 2018, according to Dodge. The recent passage of school bond measures should keep school building starts strong, it said.
- Manufacturing plant construction will drop 1 percent after advancing 27 percent in 2017 because of several massive petrochemical projects, according to Dodge. There should be moderate growth in manufacturing construction, thanks to planned additions in square footage, it said.
- Road and bridge construction should grow by 3 percent after 1-percent improvement in 2017, according to Dodge. "Highways and bridges should be helped as federal funding rises to the levels called for by the FAST (Fixing America's Surface Transportation) Act, while the environmental categories will partly reflect reconstruction efforts related to Hurricanes Harvey and Irma," it said.