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Infrastructure Construction Expansion – Not So Fast

December 23, 2022 11:53 am / Leave a comment

Only once in 25 years have heavy engineering construction jobs increased more than 5% in one year (7.5% in 2018, 72,000 new jobs). Most of the time jobs growth is under 4% (40,000 jobs). Average growth the last 12 years (see notes below) is near 3% or 30,000 jobs per year.

U. S. Bureau of Labor Statistics (BLS) national data shows there are currently 1,078,000 Heavy Engineering jobs. In 2019 there were 1,084,000. There was a loss of nearly 100,000 heavy engineering jobs in early 2020 due to the onset of the pandemic. In 2022, heavy engineering jobs have been nearly constant, just above 1,070,000 the entire year.

Highway/Bridge comprises approximately 30% of all heavy engineering spending, so supports about 300,000 jobs per year.

The current forecast for new construction starts has increased the forecast for spending growth dramatically above previous years. Both starts and spending statistics give an indication of what to expect in the jobs situation. The spending forecast is indicating a need for a large increase in jobs to support the new work. Spending (also consider inflation) is the critical value that determines the need for jobs. Without sufficient jobs, the spending cannot take place. If jobs do not increase to support the forecast spending, the timeline for the spending very likely will get extended.

It takes 400 jobs per year to put in place $100 million of heavy engineering construction in the year. (Some types of work would take 500 jobs, but I’ll work with 400 here). A construction program that hypothetically adds $1 billion of new construction starts in a year would see that work put in place (for Highway work) approximately over the next few years at a ratio similar to a 15:30:35:20 schedule, $150 million the 1^st year, $300 million the 2^nd year, $350 million the 3^rd year and $200 million in the 4^th and 5^th years. To support $150 million growth in the 1^st year would require 600 new jobs. To support an increase of $1 billion in spending in one year would require 4,000 new jobs.

How will the average growth in jobs affect the growth in new starts and forecast spending?

Modeling the new starts forecast, based on the spending schedule outlined above, projects the spending forecast for Highway/Bridge work over the next few years will increase by $15 billion/year. This would indicate a need to add 15 x 4,000 = 60,000 new highway construction jobs each year in 2023, 2024 and 2025. But the entire heavy engineering jobs pool has increased by that amount only once in 25 years and average growth for all heavy engineering jobs is only 20,000 jobs/year. If we take out 2020, when jobs plummeted, the average growth from 2011 to 2022 was 30,000 heavy engineering jobs per year. Keep in mind, highway is only 30% (6,000 to 9,000) of those averages. This indicates it will be very difficult to support spending growth of this magnitude. While the starts projections and resulting spending forecast indicate rapid growth, this market sector has never experienced spending or jobs growth this fast and it is likely that growth will be slower than indicated.

Some of this added work will be absorbed into the existing workforce, backfilling a large deficit in business volume. See this short post Construction Spending – Volume – Jobs Since the Pandemic, nonbuilding construction volume (spending minus inflation) is down 20%, but nonbuilding jobs are down only 1.5%. Compared to 2019, nonresidential construction has an 18% business volume deficit. In other words, Nonres construction in 2022 now has 18% more jobs per volume of work put-in-place than it did in 2019. Total all construction business volume in that period is down 10% while jobs are up 1.5%.

Aside from backfilling volume of work, this shows a shortfall of workers that would likely be needed to support the increased workload. The labor force is insufficient to accommodate that large an annual increase in spending. This could result in one or more of these outcomes: either the workforce must somehow increase faster, or the project spending could slow and duration would get extended, which is more likely.

Jobs shortfall to support 2022-2026 spending identifies unsupported need. If jobs cannot be filled, annual spending will be lower and construction timeline would get extended.

Currently, national construction unemployment rate is near or under 4%. That is an extremely tight jobs market, not an easy growth situation. Typically, when unemployment is in the 6% to 8% range there are workers on the sidelines ready to go right back to work. Unemployment seldom falls below 5%. The current jobs situation and unemployment rate seems to indicate there are few workers ready and available to support an immediate increased workload. This adds to the difficulty of expanding the workforce at a rapid rate.

In this analysis, the potential rate of jobs growth and the current unemployment rate both suggest that the projected rate of spending growth would not be supported. A slower rate of spending leads back to reducing starts.

Burning Questions – Recession, Labor, Infrastructure

June 30, 2022 1:00 pm / 4 Comments on Burning Questions – Recession, Labor, Infrastructure

I gave two conference presentations in the past month. The most pressing questions from the audience were:

Are we headed into a recession? When will recession start?

What can be done about the labor shortage?

How can we support all the infrastructure work that is about to begin?

RECESSION

There is no question the sizable drop in starts in 2020 lead to a downturn in construction spending, mostly felt in 2021, but extending somewhat into 2022. However, this quickly turned around for residential spending and nonres bldgs spending is now past the low point caused by the pandemic initiated slowdown. With new construction starts to date at all-time highs and the forecast for new construction starts in the pipeline, it’s hard to envision how this would lead to a construction recession.

In 2021, new starts increased 17%. Residential +21%, Nonres Bldgs +15% and Nonbldg +9%.
In 2022, new starts are forecast up 11%. Residential +10%, Nonres Bldgs +18% and Nonbldg +4%.
In 2023, new starts are forecast up 10%. Residential +12%, Nonres Bldgs +7% and Nonbldg +11%.

Total of all starts year-to-date in 2022 are up 6% over Jan-May 2021. Nonres bldgs starts are up 17% year-to-date. For the past 6 months, Dec’21 to May’22, residential construction starts posted 5 of the 6 highest months ever. The 6mo total for residential starts is the highest 6mo total ever recorded, up 4% over the previous 6mo record, posted in 2021.

Residential new starts get spent at a ratio of 70:30. Nonresidential Bldgs spending from new starts, on average, gets spent over the next 3 years in the ratio of 20:50:30. That is, 20% of spending from all starts within the year gets spent within the year started, 50% gets spent in the following year and 30% gets spent in the 3rd and sometimes 4th year. So from this we can say, if new starts are up 10% for the year then spending from that source will increase 10% x 20% or 2% the 1st year, 10% x 50%, 5% the 2nd year and 10% x 30%, 3% the 3rd year. If we get 3 consecutive years of growth in new starts there would be no downward pressure on spending for the next 3 to 4 years.

In the 2nd half of 2021, residential starts, although still strong, posted a few lower monthly totals. Although 2022 spending will still finish the year up, these lower monthly starts from late 2021 will work to cause a slight spending dip in the 2nd half of 2022. Nonresidential Bldgs spending is slowly increasing in 2nd half 2022. Nonbldg spending is flat or very slowly decreasing. The net effect is spending will post a decline in 4 of the next 8 months of 2022, but the total declines may not result in 2 consecutive quarters of declines. By the time we head into 2023, all three major construction sectors are in a growth pattern.

So, we will see a few months of spending declines, but the new starts pool of work is growing, not decreasing. The current forecast model is predicting no recession on the horizon.

LABOR SHORTAGE

This next plot shows labor and volume of work (spending minus inflation) to support that labor growing equally, albeit with short-term peaks and troughs, from 2011 to 2018. In fact, this equal growth extends far back with only few years causing exception to this pattern. This plot, and the extension of this plot to older data, shows that normally, labor increases at the same rate as volume. You can see that 2018 posted a significant drop in volume while jobs continued to increase. This departure had nearly corrected itself by Jan 2020.

The most recent construction spending report, issued July 1, revised unadjusted spending data for 2020 and 2021, both years added $30+bil. That brought volume up those years on this plot. The current spread between jobs and volume of work is still 10%.

In May of 2020, jobs were already on the rebound, but the volume of work was not. Work volume did recover some at the end of 2020 but then fell again, as was predicted, into mid-2021. In May of 2020, jobs and the volume of work were near balance. Since May of 2020, spending increased by 22%, but most of that was inflation. Since May 2020, actual work volume increased by only 1.5%. Jobs increased by 9%.

The last time the normal jobs/volume growth pattern was disrupted like this was 2006, the only other time in the last 25 years this occurred.

Volume, not spending, supports jobs. If volume is down, support for more jobs drops. If jobs increase while volume is declining then productivity is declining and the number of jobs required to put-in-place $1 billion of construction volume increases. At the same time, the inverse, the amount of volume put-in-place per job, decreases. This productivity loss drives up construction labor cost inflation and the need for additional labor to complete the job.

edited/added 8-6-22 Where the construction jobs are:

From Feb 2020 to Jul 2022 Nonres Bldgs and Nonbldg jobs are down 3.5% and 1.5%. Volume of work is down 20%.

Residential jobs are up 6.5%. Rsdn volume is up 14%.

It’s not quite that bad in either sector because some workers classified and counted as nonresidential perform work in the residential sector.

Total jobs up 1%. Total volume down 7%. That’s a slip of 8% in productivity. If labor is only 30% of total construction cost, an 8% slip in productivity is a 2.4% increase in inflation. That’s in addition to changes in wages.

INFRASTRUCTURE

The current administration has approved an infrastructure spending bill that earmarks approximately $500 billion for construction spending. It will take several years to start all this work.

The infrastructure spending bill may fund construction for a variety of buildings and non-building types of construction, for example, highway, water and sewer, educational, healthcare, etc. Rather than strictly classified as infrastructure, or as commonly referred to as nonbuilding construction, this bill will fund some forms of buildings and non-building construction in the public construction sector.

The total of all public construction is only 25% of all construction. This subset of construction totals about $360 billion in annual construction spending. It has never increased by more than $37 billion in spending ($35 billion in volume) in a year. Average growth is closer to $10-$15 billion/year. This public sector of construction does not have the capacity to increase by $100 billion/year.

As you can see in the plot above, it takes about 5000 jobs to support $1 billion of volume for 1 year. So, increasing volume by $35 billion in one year would require 35 x 5000 = 175,000 new jobs for that year. Keep in mind, this is to support a subset of construction that is only 25% of all construction.

Jobs rarely (4 out of 50 yrs) increase by more than 400,000 in one year for all construction. Even taking out the 13 years when jobs dropped, the average jobs growth for the past 50 years is only 220,000/year for all construction. That would seem to indicate the average growth for the public sector, at 25% of all construction, averages only 55,000 jobs/year.

Total all construction for the three years 2022-2023-2024 is forecast to increase $140 billion, $117 billion and $116 billion. The remaining 75% of the construction industry still adds a lot of demand for growth and jobs beyond just that of the public sector that gets a boost from the infrastructure bill. But after adjusting for inflation, the growth in volume over this three-year period is only about $120 billion. That would generate a need to create 600,000 new jobs over the next three years. About 25% of those jobs support the infrastructure funded growth.

If the infrastructure spending bill adds $35-$40 billion/year in spending, $30-$35 billion/year in volume, the need would be 150,000 to 175,000 jobs/year to support that 25% of the construction industry. Since it is unlikely the public sector of construction could add that many jobs, it is more likely the amount of construction spending added yearly will be somewhat lower.

Infrastructure has a slower spending curve than the 20:50:30 for nonres bldgs, roughly more like 15:40:30:15. If $100 bil of new contract awards start in 2022 then spending would be $15 bil in 2022, $40 bil in 2023, etc.. At $100 bil of new starts per year, the highest one-year growth would be $40 bil, probably double the pace the sector can grow.

July 2019 Construction Briefs

July 26, 2019 1:44 pm / Leave a comment

7-26-19

Total all construction jobs including supervisory jobs is now only 3% below pre-recession high. However, volume of work adjusted for inflation is still 18% lower than pre-recession high. From the 2006-2007 pre-recession peak until now, non-supervisory jobs have recovered to within 6% of the previous high and supervisory jobs are now 7% higher than pre-recession high.

Residential Construction jobs are up 78,000 in the past year, ~3% growth in jobs, but residential construction volume in the same period dropped 8%. Considering residential construction spending is down 8% ytd, residential construction inflation is up minimum 2-3%, so volume is down 10%-11%, and residential jobs are up 3%, 2019 will be the worst year for residential productivity declines since the period 2006-2009.

Rider Levett Bucknall national average construction cost inflation is currently up 2.6% for the 1st 6 months 2019, 5.2% annualized. It’s up 5.7% year over year. This is in line with Turner Construction’s quarterly Building Cost Index, also up 2.6% year-to-date, annualized 5.2%, and up 5.5% year over year. These are both nonresidential building final cost inflation indices.

The PPI average Final Cost of 4 Nonresidential Trades for the 1st 6 months is up 2.9%, annualized at 5.8%. The PPI average Final Cost of 5 Nonresidential Buildings for the 1st 6 months is up 2.6%, annualized at 5.2%.

Construction Analytics current nonresidential building cost index for 2019 is 5.0%.

Forecasting construction spending in 2019 up less than 2%, and composite construction inflation of 4.2%, real volume for 2019 will be down about 2.5%.

The share of total residential construction spending on renovations remained fairly stable from 2013 thru 2018 between 34% and 37% at an average rate of 36%, substantially lower than 2009-2012 when it ranged between 42%-48% and averaged 45%. The 2019 share of residential spending on renovations is forecast to reach 40%. Only 50% of all spending is single-family residential. Keep that in mind when referencing residential jobs to housing units.

With the release of data for July 2019 on September 3, 2019, un-adjusted construction spending data will be revised back to January 2013. Expect revisions to 2018 construction spending, in particular, I expect significant revisions to RESIDENTIAL spending in 2018. Residential construction spending in 2018 recorded 5 individual months in which the spending reported by Census varied from the statistical monthly avg by greater than 3 standard deviations. In 19 years, the only time reported spending has ever exceeded 3 standard deviations from the normal statistical monthly average was during the 2006-2009 recession. I expect all of these to be revised away.

Due to the delay in release of construction spending revisions, which would normally have been published July 1st, my midyear construction forecast will be delayed. There’s more to it than just updating 2018 spending. The spending data helps prove the new starts data, which then supports the forecast. Preparation of the midyear forecast begins after the release of the data update September 3rd.

What’s Happening In Construction Starts? YTD total is down 8% from 2018, BUT

These markets recently posted the best construction starts 12 month totals ever over the noted period. Much of the spending from these starts occurs in 2020.

Manufacturing from Jun18>May19
Office May18>Apr19
Educational Jun18>May19
Public Works May18>Apr19

These very long duration markets posted best new starts ever; Highway Dec 17>Nov18, up 25% compared to the prior 12 months which was the the 2nd best 12mo ever, with peak spending from those starts expected in 2020, and Transportation (2yrs) Jan17>Dec18, up 25% from the prior 2 years, but with the peak 12 months up 35% from the prior 2 years, with peak spending 2020.

2020 Starting Backlog for these six markets will be up an average of 25%, at the highest starting backlog ever for each of the six markets.

Non-building Infrastructure construction starts increased 46% over the last 5 years (since lowpoint Q2 2014). Non-building Infrastructure spending increased 7% in 2018 and is forecast to increase 13%/yr for both 2019 and 2020. Big increases in Highway, Transportation and Public Works.

The markets dragging on construction spending are Commercial/Retail, Power and Residential. My forecast shows Commercial Retail declining from now through 2020, but hidden in that is the fact that Stores are down but Warehouses are up; Power which slows to finish flat next year; Residential construction starts peaked in Q1 2018. Year-to-date 2019 starts are down 9% from 2018. Although YTD spending is down 8%, we will see some improvement in the 2nd half 2019. Residential spending should finish down 5% in 2019 and shows very little improvement in 2020.

Keep in mind the affect if inflation. If spending in a particular market drops 5% AND there is 5% inflation, the real market volume is down 10%. All nonresidential inflation indices are currently between 4% and 5% and are expected to remain near 4% in 2020. Residential inflation is currently near 3.5%.

Construction volume (spending inflation adjusted) hit a 3-year low in Nov-Dec-Jan. Annual volume since Dec 2015 increased 8% but then dropped 7%. Volume for the last 2 years increased less than 1%. Most of the decline to the low was residential. Nonresidential buildings and Non-building Infrastructure were flat. All three sectors are expected to improve slightly in the 2nd half 2019, although real residential volume will still be down 9% in 2019 and 2% in 2020. Nonresidential Buildings and Non-building Infrastructure will post 6% and 9% increases in volume for 2020.

Construction Markets 2019 YTD Volume +/- (Volume = Spending – Inflation)

TOTAL ALL -5%
Residential -12%
Manufacturing +5%
Office +4%
Lodging +3%
Amusement/Rec +4%
Public Safety +4%
Highway +8%
Transportation +3%
Public Works +12%
Commercial -13%
Educational -3%
Healthcare -5%
Power -4%
Communication -13%

ALSO SEE

May Construction Spending Report -Changes Since Dec 2019 Forecast

Notes on April 2019 Construction Spending Report

Public Infrastructure – Behind the Headlines

April 22, 2019 2:34 pm / Leave a comment

PUBLIC WORK AND INFRASTRUCTURE SPENDING

Most public work is non-building infrastructure, or public works type projects, but some public work is nonresidential buildings. In 2018, of $301 billion in public work, $177 billion (59%) is non-building infrastructure, $118 billion (39%) is nonresidential buildings, $6 billion is residential. The public subset of work in the last 25 years has grown by $20 billion/year only twice, during the construction boom of 2006-2007.

Excluding the worst recession years, the average annual growth of all publicly funded work since 2001 is $8 billion/year. In the four best construction boom years growth averaged $20 billion/year.

The two largest markets contributing to public spending are Highway/Bridge and Educational, together accounting for nearly 60% of all public construction spending. At #3, Transportation is only about 12% of public spending. Sewage/Waste Water and Water Supply add up to another 12% of public work. All other markets combined, none more than 4% of total public work, account for only 15% of public spending.

Non-Building Infrastructure sector, at a total of $313 billion in 2018, is less than 25% of all construction spending, mostly supported by the Power market. Power accounts for 33% of all non-bldg infrastructure spending. Highway represents 30% and Transportation about 15%. However, Power is 80% private; Highway is 100% public; Transportation 70% public.

60% of non-building infrastructure spending is publicly funded. Highway is a little more than half of all publicly funded non-bldg infrastructure work. The public non-bldg subset of work in the last 25 years has grown by $10 billion/year or more three times, 2006, 2007 and 2018. In 2006-2007, Highway accounted for most of that growth. In 2018, Transportation accounted for half the growth.

Excluding the worst recession years, the average annual growth of publicly funded non-bldg infrastructure work since 2001 is $5 billion/year. In the four best construction boom years growth averaged $12 billion/year.

Nonresidential Building sector, at a total of $434 billion in 2018, is 35% of all construction spending, mostly supported by the Educational and Commercial markets. Educational accounts for 22% of all nonresidential buildings spending, commercial 20%. However, Educational is 80% public, Commercial is only 4% public.

Other nonresidential buildings that are publicly funded are: Public Safety – 100% public; Amusement/Recreation Facilities (i.e.’ Convention Centers, Stadiums) – 45% public; Healthcare – 20% public; Office – 13% public. None are more than 4% of total public spending.

Less than 30% of nonresidential buildings spending is publicly funded. Educational is 60% of all publicly funded nonresidential building. The public nonresidential building subset of work in the last 25 years has grown by $10 billion/year twice, in 2007 and 2008. Both times, Educational accounted for 75% of that growth.

Excluding the worst recession years, the average annual growth of publicly funded nonresidential building since 2001 is $4 billion/year. In the four best construction boom years growth averaged $8 billion/year.

Residential is 40% of all construction spending but only 2% of public spending.

Average post-recession growth in public infrastructure + public institutional jobs is about 40,000 jobs per yr. Maximum growth in a year was 60,000 jobs. Growth of $10 billion in spending in a year supports about 40,000 new jobs.

All public work in the last 25 years has grown by $20 billion/year only twice. The average annual growth of all publicly funded work since 2001 is $8 billion/year. In the four best construction boom years growth averaged $20 billion/year.

Total All Public Infrastructure construction, including non-building public works and nonresidential public buildings, already has 2019 and 2020 growth projections at historic capacity of +$20 to +$30 billion/year. Historically, even in the construction boom years of 2005-2008, we have never exceeded that growth volume, especially by another $10-$20 billion/year, nor added an additional 40,000-80,000 jobs per year above the average 40,000 or the maximum 60,000 jobs in a year.

Any government funding intended to increase public infrastructure construction would most likely be limited by industry growth rates to at best no more than $10-$20 billion a year.

See Marketwatch.com for additional notes I’ve posted regarding spending limits.

The above Marketwatch article links to a twitter thread I posted that summarizes Infrastructure limitations in a nutshell.

See also these articles for much more analysis on Infrastructure

2018/02/16 Down the infrastructure rabbit hole

2017/01/30 Infrastructure – Ramping up to add $1 trillion

2019 Construction Economic Forecast – Nonresidential – Dec 2018

November 23, 2018 1:22 pm / Leave a comment

Construction Analytics 2019 Construction Economic Forecast – Nonresidential

This Dec. 2018 Construction Economic Forecast analysis addresses New Construction Starts, Inflation, Cash Flow or distribution of construction work over time, Annual Backlog and Spending. New Starts is new work entering Backlog. Cash Flow gives the pattern of Spending. Inflation differentiates between Revenue and Volume. Backlog, which can be referenced to assess expected future Volume and Spending, provides an indication of when Volume occurs or in what year Revenues occur. Starts data is from Dodge Data & Analytics. Spending data is from the U.S. Census Bureau. Jobs data is from the Bureau of Labor Statistics. Inflation data is from the source labeled. Cash flow, Backlog and Inflation forecast data are developed internally. All data in this report is national level data. All forecast data is by Construction Analytics.

NOTE 12-6-18: Dodge Data and Analytics new construction starts for October, released 11-20-18, reached the 2nd highest seasonally adjusted annual rate ever, 2nd only to June 2018. Most spending from these new starts will occur in 2020. This will increase the 2020 nonresidential buildings spending forecast, with the largest increase in manufacturing. Construction Starts for October, the Dodge end-of-year report and October spending, all released between 11-21-18 and 12-3-18 significantly alter this analysis. The biggest changes reduced residential spending for the next two years. See the 2019 Construction Economic Forecast – Summary for the residential analysis.

This analysis was edited 12-6-18 to include that most recent starts data and the U S Census October spending data.

For a fully formatted PDF of this Nonresidential report 2019 Construct Econ Forecast – NONRES – Dec 2018 RVSD 12-6-18

Link to 2019 Construction Economic Forecast – Summary

Summary

Total of All construction spending is forecast to increase 6% to $1.321 trillion in 2018 and 1.5% to $1.341 trillion in 2019. Spending in 2020 is forecast to reach $1.426 trillion.

Nonresidential Buildings construction spending is forecast to increase 6% to $444 billion in 2018, 0% to $443 billion in 2019 and 9% to $482 billion in 2020. The forecast for 2019 will be supported by Office (which includes data centers) and Amusement/Recreation but there is downward pressure from slowdowns or timing of cash flow in Manufacturing, Lodging, Healthcare and Educational. Educational, Healthcare, Recreation, Office and Manufacturing all support growth in 2020.

Residential construction spending for 2018 was recently revised down and starts for 2019 are expected flat to down slightly. The forecast is now for an increase of 5.6% to $562 billion in 2018, 0.5% to $564 billion in 2019 and 2.3% to $577 billion in 2020. Although residential spending is still increasing, growth has slowed to less than inflation. Real volume after inflation is declining.

Nonbuilding Infrastructure construction spending is forecast to increase 7.2% to $316 billion in 2018, 5.7% to $334 billion in 2019 and 10.1% to $368 billion in 2020. Transportation spending provides strong growth for the next three years from record new starts in 2017 and the 2^nd best year of starts in 2018. Public Works had strong growth in 2018 starts and Highway starts hit a new high in 2018.

In July of the following year the spending data for the previous two years gets revised. Those revisions are always up, although some markets may increase while others decrease. So, even though the current forecast for 2018 is $1,328 trillion, a gain of 6.5%, that will most likely increase.

Dodge Data construction starts are initially anticipated to finish 2018 flat compared to 2017. However, starts are always revised upward in the following year. I expect revisions will show 2018 starts increased by 4% over 2017. Even with revisions, 2018 starts will post the slowest growth since 2011. Starts increased 84% in the period 2012-2017, residential 150% and nonresidential buildings 80%. This forecast includes only a total of 10% growth for the 3-year period 2018-2020.

Starting backlog, currently at an all-time high, increased on average 10%/year the last three years. For 2019 starting backlog is forecast up 10% over 2018. 80% of all Nonresidential spending within the year will be generated from projects in starting backlog. Due to long duration jobs, 2019 nonresidential buildings starting backlog is up 50% in the last 4 years. Current indications are that 2019 backlog will be up 6%-8% across all sectors.

Construction Inflation Indices

Outside of recession years, nonresidential buildings construction spending year over year growth dropped below 4% only SIX times in 50 years. The long-term average inflation is 3.75%. Every year that spending dropped below 4% growth, nonresidential buildings real volume declined.

Construction Analytics Nonresidential buildings inflation forecast for 2018 is 4.9%. Current reliable inflation forecasts range from 4.7% to 5.6%. Inflation in this sector has been at 4% or higher the last four years.

Anticipate national average construction inflation for nonresidential buildings for 2018 and 2019, including steel tariff impact, of 4.25% to 5.5%, rather than the long-term growth average of 4%. Adjust for any other yet unknown tariffs that may hit after Jan 1, 2019.

In the following plot, Construction Analytics Building Cost Index annual percent change for nonresidential buildings is plotted as a line against a bar chart background of the range of all other nonresidential building inflation indices. Usually the lows are formed by market basket input indices while the highs are formed by other selling price indices.

Non-building Infrastructure indices are far more market specific than any other type of index. Reference specific Infrastructure indices rather than any average.

These links point to comprehensive coverage of the topic inflation and are recommended reading.

Click Here for Link to a 20-year Table of 25 Indices

Click Here for Cost Inflation Commentary – text on Current Inflation

New Construction Starts

All construction starts data in this report references Dodge Data & Analytics Starts Data.

For nonresidential buildings, approximately 20% of the spending occurs in the year started, 50% in the next year, 25% in the third year and only 5% in the fourth year or later year. This means that nonresidential spending growth in 2019 is still being affected by starts from 2016.

The following plot show the 3-month moving average and trend line of starts for Nonresidential Buildings. Starts can be erratic from month to month. The trend line gives a better impression of how starts impact spending. It is the rate of change in starts cash flows that provides a predicting tool for spending.

Starts are sometimes misinterpreted in common industry forecasting articles. Starts dollar values represent a survey of about 50% to 60% of industry activity, therefore Starts dollar values cannot ever be used directly to indicate the volume of spending. Also, Starts do not directly indicate changes in spending per month or per year. Only by including an expected duration for all Starts and producing a forecast Cash Flow from Starts data can the expected pattern of spending be developed. Finally, it is the rate of change in Starts Cash Flows that gives an indication of the rate of change in spending.

Starts is a survey sample of a portion of all construction, on average about 50% to 60% of all construction. This can introduce potential error when using starts to predict spending. In any survey, if sample size remains constant, let’s say at 50% of population, but survey response increases 5%/year, then output of the population should increase at 5%/year. However, if survey response increases at 5%/year but sample size is increasing at 3%/year then output of the population should increase at only 2%/year.

If starts survey sample size varies from year to year, it’s possible some of the anticipated spending growth reported by new starts may not represent growth in real volume of future work but could simply represent a change in sample size. Potential significant variations in sample size are seen in the data and may cause errors in the forecast. The detail of Education spending provides an example.

Starting Backlog

Nonresidential Buildings starting backlog at the beginning of 2018 reached an all-time high. For nonresidential buildings this backlog will contribute spending until the end of 2021. Starting Backlog for 2019 is forecast to increase 8%. For purposes of this analysis, I’ve set only moderate or low increases in starts for 2020 and 2021, so this forecast may hold down the future backlog and spending forecast. However, backlog leading into 2019 is up 70% in 5 years.

Starting Backlog is the Estimate-to-Complete (ETC) value of all projects under contract at the beginning of a period. Projects in starting backlog could have started last month or last year or several years ago.

75%-80% of all Nonresidential Buildings spending within the year will be generated from projects in starting backlog.
80%-85% of all Non-Building Infrastructure spending within the year will be generated from projects in starting backlog.

Non-building Infrastructure starting backlog at the beginning of 2018 reached an all-time high. Some of this is very long-term work that will contribute spending until the end of 2025. In fact, more than half of all spending in 2019 comes from projects that started prior to Jan 2018. 2019 Backlog is forecast to increase 10%. Backlog is up 45% in 5 years but is up 50% in just the last 3 years.

Cash Flow

Simply referencing total new starts or backlog does not give the complete picture of spending within the next calendar year. Projects, from start to completion, can have significantly different duration. An office building could have a duration of 18 to 24 months and a billion-dollar infrastructure project could have a duration of 3 to 4 years. New starts within any given year could contribute spending spread out over several years. Cash flow totals of all jobs can vary considerably from month to month, are not only driven by new jobs starting but also by old jobs ending, and are heavily dependent on the type, size and duration of jobs.

Although new nonresidential buildings starts increased only 1.6% in 2018 note that cash flow increases by almost 8% due to a very large increase from starting backlog. To a lesser extent the same thing happens in 2019.

Non-building infrastructure starts and cash flow follows a similar pattern. In 2018 and 2019 new starts decline moderately, spending from new starts declines substantially but starting backlog and spending from starting backlog increases are so strong that total cash flow within the year continues to increase.

Nonresidential Buildings Spending

Construction spending is strongly influenced by the pattern of continuing or ending cash flows from the previous two to three years of construction starts. Current month/month, year/year or year-to-date trends in starts often do not indicate the immediate trend in spending.

Nonresidential Buildings construction spending is forecast to increase 5.8% to $444 billion in 2018, fall -0.2% to $443 billion in 2019 and climb 8.9% to $482 billion in 2020. Office (which includes data centers) and Amusement/Rec support the 2019 forecast but there is downward pressure from slowdowns or timing of cash flow in Manufacturing, Lodging, Healthcare and Educational. Educational, Healthcare, Recreation, Office and Manufacturing all support growth in 2020.

Nonresidential buildings construction spending in constant $ (inflation adjusted $ to base 2017) will reach $424 billion in 2018 after hitting a post-recession peak of $431 billion in 2016 and dropping to $419 billion in 2017. In 2019 constant $ spending will total $420 billion. Constant $ spending or real volume growth shows all years from 1996 through 2009 had higher volume than any years 2016-2019. Volume reached a peak near $530 billion in 2000 & 2001 and went over $500 billion again in 2008. In constant $ volume, I don’t see returning to that peak before 2023.

Educational

New Starts averaged YOY growth of 11%/year for the last five years. Starts from the last five months of 2017 posted the highest 5mo total in at least seven years, 13% higher than the next best 5mo. The highest and 2^nd highest quarters were both within the last 15 months, so both those periods contribute fully to 2018 spending. 2017 starts will support 25% of spending in 2019. Starts are expected to finish 2018 up 5%. 2018 starts will support 50% of spending in 2019 and 20% of spending in 2020.

Backlog in five years 2014-2018 increased 11%/year. It is unusual that Starts and Backlog continue to grow for five years but that growth is not reflected in actual spending. From 2013 to 2018 new starts increased 66% but spending for the period of those starts will increase only 34%. That would seem to indicate a very large volume of work is growing in backlog and spending at some point should boom and remain high for an extended period, but the cash flow model is not in agreement. A possible explanation is the sample survey of new starts has been increasing, so not all the starts growth for five years represents growth in new work. Some of the increase in starts is simply growth in sample size. Educational starts 2012-2015 averaged 50% sample size of total spending. In 2016-2018 the average sample size vs spending was 60%.

Spending is now at a post-recession high. Spending increased 6%/year for 2015, 2016 and 2018, while 2017 increased only 1%. 2017 and 2018 are still subject to revision. Expect to see growth level off until mid-2019. Leveling at post-recession high is not a bad thing. A build-up of backlog is indicating that spending should increase substantially, but a disconnect in the analysis was noted above. Spending growth increases again in 2020.

At peak, educational represented 30% of all nonresidential buildings spending. Now it’s only 22%. That’s expected to increase slightly for the next three years.

Educational construction spending is forecast to reach $96 billion in 2018, $93 billion in 2019 and $103 billion in 2020.

Healthcare

Starts are at an all-time high, up almost 40% in the last 5 years. Some longer duration projects push a substantial amount of spending out to 2020.

Backlog increased 11% for 2017 and 8% for 2018. Backlog has been increasing unevenly and grew 30% in 4 years. Backlog increases 3% to start 2019 but is not indicating spending growth in 2019. Cash flow from backlog is indicating spending growth in 2020.

Spending has been very slow to recover, experiencing declines as recently as 2013 and 2014, hitting an 8 year low in 2014, when all other nonresidential building markets had already returned to growth. 2017 posted a gain of 4.4% but then 2018 gained less than 1%. Backlog is increasing but real spending gains won’t materialize until 2020.

Like Educational, backlog growth has been exceeding spending growth for the last few years. That would indicate spending at some point may boom and remain high for an extended period. Cash flow models indicate this may occur in 2020. Other possible explanations are; starts are overstated; cash flow curves (average 28mo) are too short in duration; projects got canceled after starts were recorded; large spending revisions could get posted in the future.

Healthcare construction spending for 2018 is forecast to finish at $42 billion, an increase of only 0.7% over 2017. Considering 4% inflation, Healthcare real volume has declined every year since 2012 with exception of 2017 which would have been flat. It will decline again in 2019 with a forecast -2.7% decline in spending. 2020 realizes the 1^st big spending increase in 8 years, +14% to $47 billion.

Amusement/Recreation

Starts are up 13% in 2018. Although down 1% in 2017, starts increased at an average rate of 15%/yr. from 2013 through 2017. Within the past 15 months there have been five billion-dollar project starts.

Starting backlog increased 20%/yr for the last four years while spending was increasing at a rate of 10%/year. This means backlog should continue to support increased spending at least for the next few years.

Spending hit an 8 year low in 2013 but we’ve had 3 years of excellent growth of 10%/yr or more since then. 2017 spending increased only 7% and 2018 11%, but cash flow is indicating a 12% increase for 2019. This market is only 5% of nonresidential buildings spending.

Amusement/Recreation construction spending for 2018 is forecast to reach $28 billion, an increase of 12% over 2017. 2019 is forecast to increase 12% to $31 billion.

Commercial/Retail

Commercial/Retail starts have been increasing every year since 2010 but starts in 2018 are flat vs 2017 Starts are at a peak but after 5 years of 15%-20% growth/year are up only 4% in the last two years.

Commercial starts are seeing strong gains from distribution centers (warehouses which are in commercial spending). The decline in retail stores is being hidden by the increase in warehouses, which are at an all-time high. Stores are down 10% from the peak in 2016. Warehouses are still up only 4% in 2018 but increased 500% from 2010 to 2017.

In 2010, Warehouse starts were only 1/3 of Store new starts. In 2018, Warehouse starts are 25% greater than Store starts. Warehouse starts have increased between 20%-40%/year for seven years and are now five times greater than in 2010. See this Bloomberg article Warehouses Are Now Worth More Than Offices, Thanks to Amazon

Some big projects from a period of strong new starts growth are ending. This will slow spending after 7 years of strong growth. 2018 backlog still produces a spending increase which may finish close to +5%, but forecast shows spending slows even more to only 2% in 2019 and less than 1% in 2020.

The biggest change in Commercial/Retail in the last few years is that backlog is now more heavily weighted with warehouse projects than store projects. The mix has shifted from 60/40 stores in 2014-2015 to 55/45 warehouses in 2018-2019.

Spending dropped from the high of $90 billion in 2007 to $40 billion in 2010. It has been growing steadily since reaching bottom in early 2011 and has recovered to an annual total rate of $92 billion in 2018. Spending increased an average of 13%/year for six years from 2012 through 2017. Spending growth will be flat in 2019 and 2020 but we are currently near the all-time high. It is worth noting that the $92 billion in 2018 dollars after accounting for inflation is still 30% lower than the $90 billion of spending in 2007.

Commercial/Retail construction spending is forecast to reach $92 billion in 2018, $91 billion in 2019 and $90 billion in 2020, flat to no growth after seven strong years.

Office

Starts finished 2018 up 8%. In 2016 starts were up 30% and had reached similar too highs in 1998 and 2006-2007. Starts have been increasing since 2010 with the strongest growth period 2013-2016, up 25%/year. Although the rate of growth slowed in 2017 and 2018, the total amount of starts is at an all-time high. In the last 12 months there are no less than a dozen project starts valued each at over $500 million, a few of those over $1 billion. That high-volume period of starts will elevate spending through 2019 and well into 2020. Data centers are included in Office.

Backlog for 2017 was the highest in at least 8 years, more than double at the start of 2014 when the current growth cycle of office construction spending began. For 2018, backlog reached a new high, up 25% over 2017. Starting backlog for 2019, up 19%, is three times what it was just five years ago. Office starting backlog 2017-2019 increased an average of 20%/year. Backlog growth should support strong spending into 2020.

Growth of only 1% in starts for 2019 and 3% increase for 2020 keeps office starts near the all-time high. Even with low growth in new starts for the next two years, the amount of work in backlog from starts on record provides growth in spending for the next three years.

Spending increased by 20%/year from 2013 to 2016, but in 2017 it turned to a 1% decline. That was unusual and unexpected since 2016 starts and 2017 backlog had both reached 10-year highs. Possible explanations might be: a very large number of projects were canceled or delayed; potential revisions to 2017 Office spending may still be pending (In July every year, the previous two years of spending gets revised); but highly probable is the sample size of starts increased dramatically in 2016 and the 30% increase in starts was not all growth in real volume but was partially just a change in sample size, therefore the spending forecast may have been significantly overstated.

Again, it is worth noting that spending in 2018, which for the first time returned to the previous highs posted in 2008, once adjusted for inflation is still about 25% lower in real volume than 2008.

Office construction spending is forecast to reach $74 billion in 2018, $79 billion in 2019 and $84 billion in 2020.

Lodging

Lodging posted a new high for starts in 2018, up 8% over 2017. For the period 2011-2016 starts averaged over 30%/year growth for six years. In 2017, starts declined 4% but that remained near the 2016 high. Now with a gain in 2018, those three years average very evenly. Peak starts were in 2016.

Starting backlog averaged increases of 30%/yr. from 2015 to 2017. Lodging starting backlog jumped from $7 billion/yr. in 2014 to $15 billion/yr. in 2018. It has supported similar spending growth. Lodging projects have relatively short duration and timing of starts within the year is important to spending and next-year starting backlog. Compared to most other types of nonresidential buildings, a greater than average percentage of lodging spending occurs within the year started. So, movement in starts has a greater impact on spending within the year.

Lodging spending recorded the largest drop of any market, falling 75% from $36 billion in 2008 to $9 billion in 2011. However, it also recorded the strongest rebound of any market, climbing 20% to 30% per year for the 5-years 2012-2016. In 2011, Lodging dropped to only 3% of total sector spending. It rebounded to 7% in 2017. Lodging actual spending increased 12% in 2018. It’s still not back to the previous high of $36 billion in 2008. Beyond 2018, spending will decline, but this is after 6 years of growth totaling 300%.

Lodging construction spending for 2018 is forecast to reach $32 billion, an increase of 12% over 2017. Spending is forecast at $31 billion for 2019 and $32 billion for 2020.

Religious and Public Safety

Spending of $11-$12 billion/year represents only 2.5% of total nonresidential building spending. In 2008-2009 it was 5% of the total. The religious building market has been declining since 2002 and is down 55% since then. Public Safety peaked in 2009 and has declined every year through 2017, down 40% from the peak. In 2018, public safety spending is increasing.

I don’t track starts or backlog for these markets. I do track monthly spending and carry a forecast in the Table of Construction Spending classified as Other Nonres Buildings.

Religious and Public Safety currently amounts to $12 billion/year. A 10% change in spending of $1.2 billion in a year would amount to only 0.2% change in all nonresidential buildings spending. This category doesn’t often change by 10% yr/yr, so it’s affect is very small.

Manufacturing

Manufacturing reached record high starts in 2014 and record spending in 2015, posting a 100% increase in new starts in 2014 that drove starting backlog and spending to new highs in 2015 and 2016. New starts declined 20%-30%/year for the next two years after the high in 2014 but then 2017 starts increased 27%. Now 2018 starts have increased by 18%, yet that is still 15% lower than 2014.

Starts in June came in at four times the average of all monthly starts in the last three years. October came in at three times the average. Those two months would add up to more than half of annual starts for any of the last three years. Some of these projects will still be contributing to spending in 2023.

Starting Backlog remained equally high in 2015 and 2016, but then dropped 17% in 2017. Backlog dropped 17% in 2017 and actual spending dropped 13%. That was expected. What was unexpected is that 2017 posted another very strong year of new starts, up 27%. This will support a spending rebound in the future but not before a temporary drop in mid-year 2019.

Spending was forecast to fall in 2017 after peaking in 2015 from massive growth in new starts in 2014. Based on cash flows from starts, from April 2016 through the end of 2017 spending was expected to decline in 17 of 21 months. It did decline in 14 of those months. Over the next 30 months there are only six months have a forecast to decline, all of those between March and September 2019, all caused by uneven cash flows from very large projects either ending or pushing spending out to future years. This will hold down total spending in 2019. Although backlog for 2019 is up 40%, much of the cash flow from that will occur in 2020.

Manufacturing construction spending is forecast to reach $67 billion in 2018, $65 billion in 2019 and then jump 25% to $82 billion in 2020. Given the growth in backlog and some very long duration projects started recently, spending growth may increase again in 2021.

Non-building Infrastructure Spending

Non-building Infrastructure construction spending is forecast to increase 7.2% to $316 billion in 2018, 5.5% to $334 billion in 2019 and 9.9% to $367 billion in 2020. The forecast growth for 2019 will be supported by Transportation and Public Works but will be held down somewhat by Highway. Transportation terminals and rail project starts both increased more than 100% in 2017 and both are long duration projects types that will contribute spending for several years. Environmental Public Works project starts increased 20% in 2018 and boost spending in 2019 and 2020.

Non-building Infrastructure constant $ volume reached a high of $309 billion in 2015 and peaked at the all-time high of $311 billion in 2016, but then dropped to $295 billion in 2017. 2018 saw a return to $303 billion and 2019 is projected to reach $309 billion. Only twice before, 2008 and 2009, did Infrastructure exceed $300 billion. Constant $ spending or real volume growth has been within +/- 3% for the last 5 years.

Non-building Infrastructure spending, always the most volatile sector, in mid-2017 dropped to 2013 lows. However, this short dip was predicted. Cash flow models of Infrastructure starts from the last several years predicted that dips in monthly spending would be caused by uneven project closeouts from projects that started several years ago, particularly in Power and Highway markets.

Current backlog is at an all-time high, up 10%+ each of the last 3 years, and spending is expected to follow the increased cash flows from the elevated backlog. Transportation terminals new starts in 2017 jumped 120%. Rail project starts increased more than 100%. Starting backlog for all transportation work is the highest ever, up 100% in the last two years. Transportation spending is projected to increase 15-20%/year for the next two years.

No future growth is included from infrastructure stimulus and yet 2018 spending is projected to increase by 7%. 2019 and 2020 are forecast to increase 6% to 10%.

Power

Power spending as reported by U.S. Census includes infrastructure for all electric power generation plants and distribution, gas and LNG facilities and all pipelines. In the last year there were more than twenty $billion+ project starts and a dozen more projects valued over $500 million each. In 2015 pipeline starts represented less than 10% of all power starts. In 2018 year-to-date, pipelines are half of all power work started. In three years, pipeline work increased by more than $20 billion or 500%.

Starts, completions and pauses in work cause erratic movement in actual spending. Cash flow may be adversely impacted by very large projects ending or by the delay of large projects that started previously. A multi-billion-dollar nuclear power plant stopped work and large pipeline project delays after the start was recorded have adversely impacted the cash flow forecast. This impacted the spending forecast in 2017, which finished down 5%, 15% below initial projections, and again 2018 will finish 10% below initial projections for 2018 posted back in Nov. 2017.

Although total power starts for 2018 are down 13%, electric / power generation is down 35% but gas/LNG and pipelines starts are up. Starts peaked in 2015-2016, but total in backlog reached a peak in 2018. However, much of this work is very long duration projects, so 2018 backlog will be providing spending at least through 2021. Spending could see 5% gains in 2019 but unless 2019 starts increase 2020 will experience a modest decline. Dodge is predicting 2019 starts will decline 3%.

Power construction spending is forecast to reach $102 billion in 2018, $109 billion in 2019 but then only $107 billion in 2020.

Power spending highlights one of the biggest shortfalls of judging expected performance based on year-to-date change. Notice in the 1^st quarter of 2018, spending year-to-date (YTD) was down 8% to 10% from 2017. It is clear now that did not give a good indication of how 2018 would proceed. A better indication is provided by the trend line expected in the current year versus the trend line in the previous year. If they diverge, then early YTD changes will not give a clear indication of expected performance in the current year. An example follows. Note, SAAR data shows performance trend but cumulative NSA$ is needed to get YTD$.

Power posted the highest spending for 2017 early in the year, then declined in the 2^nd half. In 2018, the beginning of the year posted the lowest rate of spending for the year, increased through June, then stayed higher in the 2^nd half. The YTD percent growth compared to 2017 has been increasing throughout the year. Higher spending in the 2nd half 2018 compared to the lowest values of the year in late 2017 will boost year-to-date spending every month through year end. Although YTD spending through August is up only 2%, I expect the total for the year will finish up 6%. Even if power spending declines 1% per month for the remainder of the year it will still finish up 5% over 2017.

Highway/Street/Bridge

Highway starts hit an all-time high in 2017 and are forecast to climb another 8% in 2018. This model is predicting starts growth will slow or level off after 2018.

Starting backlog increased 30% in the last 3 years and will increase another 14% leading into 2019. This long duration backlog is going to provide for a large increase in spending but not until late 2020 and even more-so into 2021.

Spending in 2018 did not increase in tandem with backlog, because the share of spending within the year from projects that started 1 or 2 years before began to decline. In 2020 and 2021, the share of spending within the year from projects that started 2, 3 and 4 years before is increasing.

Highway construction spending is forecast to reach $92 billion in 2018, $93 billion and then jump to $105 billion in 2020. 2021 may see an increase of 10% in spending.

Transportation

Transportation starts have two main parts, Terminals and Rail. Some analysts include transportation in nonresidential buildings. That does not account that airports include not only land-side terminals but also air-side runway work and rail includes platforms and all railway right of way work, which includes massive civil engineering structures. About half of all transportation spending is rail work.

Terminals and rail starts reached record high in 2017, both up 120% after a 35% increase in 2016. Spending in 2018 is forecast to finish up more than 20%. Starting Backlog increased 22% in 2017 then jumped 95% in 2018. However, Transportation sample size of new starts potentially increased 30%, far more than any other market. A large portion of the 2017 increase in starts is expected to be change in sample size. This model adjusts 2017 starts down by 20%. Still, most of that backlog spending will occur in future years. Some of the project starts in 2016 and 2017 have an eight-year duration. In the last 24 months there have been sixteen $billion+ new project starts and seven $500million+ new starts.

2018 total starts are 100% higher than any other year prior to 2017. Starting Backlog skyrocketed from $15 billion in 2016 to $55 billion for 2019. Backlog will support spending for several years to come. Keep in mind, when a $4 billion project first gets recorded in starts, that is the general contract. Many subcontracts will be awarded by the general contractor over the next few years.

Based on predicted cash flows from starts, spending is expected to increase at least into mid-2021. 2018-2019-2020 should see increases of 15% to 20%/year. Dodge is forecasting 2019 starts will stay close to the elevated levels of 2017 and 2018. I’m predicting starts in 2019 will decline from 2018 simply due to the huge volume of new work that started in the last two years. Even with that, backlog could set a record high in 2020.

Transportation construction spending is forecast to reach $55 billion in 2018, $62 billion in 2019 and $75 billion in 2020. Given the growth in backlog and some very long duration projects started recently, spending growth may increase again in 2021.

Environmental Public Works

Environmental Public Works includes sewerage projects, Water supply and Conservation, or Dams, water resource and river/harbor projects. New starts for all these type projects declined from 2014 through 2017. Then all showed gains in 2018 and the forecast is more gains in 2019. All of these projects are public spending and saw no real gains in spending from 2010 through 2017. With the projected increases in starts in 2018 and 2019, spending is now forecast to increase the next three years to a new high by 2020.

Public Works construction spending is forecast to grow 9% to reach $43 billion in 2018, $46 billion in 2019 and $56 billion in 2020.

Communications

Starts data for communications is not regularly reported. Total starts for the year is always recorded well after year end. A moderate forecast is included for future starts growth the next two years.

Actual spending is erratic, up 10% one year down 3% the next then up 25% followed by 2% growth. 2018 should finish down 1% after a 12% gain in 2017. The forecast shows a 5% decline in 2019 and flat spending into 2020.

Communication construction spending was up 12% in 2017 and finished at $24.8 billion The forecast for 2018 is down 1% to $24.5 billion. Expect $23 billion in 2019 and $23 billion in 2020.

For a PDF of this Nonresidential report 2019 Construct Econ Forecast – NONRES – Dec 2018 RVSD 12-6-18

Link to 2019 Construction Economic Forecast – Summary

2019 Construction Economic Forecast – Summary – Dec 2018

November 16, 2018 3:52 pm / 4 Comments on 2019 Construction Economic Forecast – Summary – Dec 2018

Construction Analytics 2019 Construction Economic Forecast

NOTE 12-6-18: Dodge Data and Analytics new construction starts for October, released 11-20-18, reached the 2nd highest seasonally adjusted annual rate ever, 2nd only to June 2018. Most spending from these new starts will occur in 2020. U.S. Census construction spending for October posted large reductions to several months of residential spending. Construction Starts for October, the Dodge end-of-year report and October spending, all released between 11-21-18 and 12-3-18 significantly alter this analysis, by far most of the 2019 and 2020 changes are significant reductions in residential spending. See the 2019 Construction Economic Forecast – Nonresidential for detail on all nonresidential and non-building markets

This analysis was edited to include the most recent starts data and the U S Census October spending data.

For a fully formatted PDF of this Report click

2019 Construction Economic Forecast – Summary – Dec 2018

Link to the 2019 Nonresidential Forecast Report

2019 Construction Economic Forecast – Nonresidential – Nov 2018