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Construction Spending in June Grows at Fastest Rate
A recent analyst report by The Associated General Contractors of America states that construction has grown at its fastest rate in June 2015 since 2006. This incredible growth spurt was brought on by several private and public categories of construction, according to the report. The private sector growth saw 15% gains last year (that off-set a few losses this year – as spending dipped to a light 1.3% in June 2015).
Spending rose strongly in June from a year ago for all major construction categories—private nonresidential, residential and public,” said Ken Simonson, the association's chief economist.
According to Simonson, construction spending in June was at $1.6 trillion – the highest since March 2014. This is indicative that spending on construction is moving forward and analysts are bullish. Private residential spending increased 0.4 percent for June and 13 percent over the past 12 months. Public construction spending rose 1.6 percent from June and 8.0 percent from 12 months earlier.
In certain regional markets, like Tampa, Florida, the real estate market and construction spending figures are especially bright. New home starts were up 24.5% over last year and new housing inventories rose 10-percent in Tampa and construction rose by 2.8%. “Rising employment, low interest rates and lower inventory are all contributing to robust growth overall, notes a senior executive at Homeowners Choice Construction LLC, a leading construction company in Tampa, Florida, “a number of big ticket exterior renovations, such as roof replacement and repair that had been postponed during the past few years are moving forward at a brisk pace.”
Despite this positive leap forward in construction spending, AGC officials warn that work shortages could occur as additional projects in both the private and public sectors ramp up. The AGC advise that developers and construction firms do a better job of treating the work like a career and offering more technical and training opportunities which could result in more robust recruiting as well as keeping key talent on the job.
AGC officials also advise that construction managers and owners adhere to the AGC’s Workforce Development Plan that provides advice on how to keep a construction crew motivated. “After all, construction is one of the few industries where the vast majority of work must be performed on-site and cannot be off-shored,” sites the AGC Workforce Plan.
In addition, the manual reports that “… A number of changing trends have combined to cripple what was once a robust education pipeline for new construction workers. Those factors include the dismantling of the public vocational and technical education programs, [and] declining participation in union apprenticeship training.”
“It is clear that construction is rebounding but the progress may stall unless there is a concerted effort at all levels of government to provide training to get new workers into high-paying construction careers,” said Stephen E. Sandherr, the association’s chief executive officer work because of a lack of qualified workers.”
Adding to optimism overall, the July NAHB/Wells Fargo Housing Market Index reached 60 in July, which is the highest level since November 2005 and this past June, The National Association of Realtors measure of existing home sales increased 3.2%, reaching the highest level since February 2007.
“While we believe every region will see different growth patterns and trends, residential growth is expected to continue for the foreseeable future,” confirmed the source at Homeowners Choice Construction LLC.
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