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The economic indicators show a thriving US economy and huge backlogs, job growth and healthy infrastructure investment points towards a strong year for construction in 2019. US economy has maintained an overall steady growth in GDP despite geopolitical uncertainty and stagnant investment. Key indicators such as construction spends, construction backlog and construction pipeline show steady growth across all building and infrastructure segments. The Trump administration has been committed to upgrading the infrastructure backbone of the country. The infrastructure goal of 2019 includes a bill providing $500 billion for highways and transit, plus additional funding for airports and water projects.
The construction industry in value terms increased at a CAGR of 8.7% during 2014-2018. Over the forecast period of 2019 to 2023, the industry is expected to record a CAGR of 4.9%, increasing from US$ 1,489 billion in 2019 to reach US$ 1,805 billion by 2023.
Irrespective of centralised infrastructure plans from Washington DC, a number of states are taking in more tax revenue leading to reinvestment in public transportation. During the last year, trade agreements have been signed with Mexico, South Korea and Canada while discussions are ongoing with the European Union. Although the situation with China is unsettled, fears of a trade war has abated. The US construction industry is expected to keep up the momentum over the next few quarters. The industry is upbeat with elevated consumer and business confidence.
Demand for labour has been steadily increasing from 2008. However, the blue-collar labour force is diminishing as more people move towards professional services. To meet requirements of the industry, construction companies are having to increase wages. It is anticipated that construction companies in the US will invest more in automation over the forecast period.
Shortages in land and labour have led to low inventories and higher house prices. The market is witnessing a strong demand and shortage of homes. New residential construction activity is expected to gain momentum in 2019 to meet this demand. Single family home construction which accounts for the largest share of the housing market has lost its momentum while multifamily housing projects are stabilising the residential construction.
Office space construction also shows a robust growth trend, increasing at a CAGR of 13.5% during 2014-2018. Over the forecast period of 2019 to 2023, the segment is expected to record a CAGR of 7.9%, increasing from US$ 79.9 billion in 2019 to reach US$ 108 billion by 2023.
Changes in shopping habits and the inability to keep up with trends has lead to the closing of well-known retailers in the US. Regardless, new startup businesses are taking off in major metro areas and although online sales grows, integration with a brick model is the way forward. An interesting case example would be Amazon Go stores that combines technology with grocery shopping to completely eradicate check-out queues. One of the biggest changes in commercial spending is the shift towards warehouse projects. Warehouses have increased 530 percent from 2010 to 2017 and is still up 4.7 percent in 2018. Among other segments, recreational spend shows one of the highest growth in 2018, a trend which is expected to continue over forecast period.
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