Despite an ongoing weak global economy, the construction industry’s solid economic recovery should continue in 2016, led by strong consumer spending according to (ABC) Associated Builders and Contractors.
The ABC forecasts a growth in commercial (nonresidential) construction spending of 7.4% in 2016 along with growth in employment and backlog. Harmon is experiencing this firsthand as we continue to see many opportunities in Senior Living and Healthcare sectors. Another encouraging sign emerging this first quarter is the increase in retail sector. Many owners and developers are pulling the trigger to start new ground up retail buildings.
According to the recent ABC Construction Confidence Index, contractor confidence overall has increased with respect to both sales (67.3 to 69.4) and profit margins (61 to 62.9). Although there is a large lack of trained and skilled personnel available in the construction industry, the rate of new hires will continue at a steady rate. Per the US Department of Labor, there is a 2.6% increase forecasted in construction employment for nonresidential building.
ABC’s Construction Backlog Indicator also signals a strong demand as the average contractor backlog stood at 8.5 months by mid-year 2015. Their 2016 forecast for increases in construction spending in nonresidential construction sectors are:
- Lodging 11.4%
- Office 8.1%
- Commercial 3.7%
- Healthcare 8%
- Manufacturing 7.4%
In summary, these are all good signs for our industry and Harmon is poised and ready to take advantage of these opportunities in 2016.