AGC National Survey: Construction Outlook Improving
The outlook for the construction industry is mixed for 2012, as firms must balance growing demand for certain private sector market segments with continued weakness in key sectors, the near end of the stimulus and declining overall demand for public sector construction. Indeed, according to an analysis of survey responses from more than 1,300 construction firms conducted by the Associated General Contractors of America and Computer Guidance, the industry is not likely to experience a recovery until at least 2013 despite some growing positive trends.
With the power, hospital and higher education sectors leading the way, demand for construction should continue to stabilize during 2012. Indeed, a clear majority of firms expect the dollar volume of projects they compete for to either grow or remain stable in every market segment identified in the survey. However, the stability masks two divergent trends – growing demand for private sector construction activity offset by declining public sector demand.
Significantly more firms (32 percent) plan to add staff this year than plan to lay off staff (9 percent). This is a marked improvement from 2011 when 37 percent of firms reported cutting staff while only 34 percent added employees. Despite the fact more firms plan to hire staff this year, those additions are likely to be modest at best.
Tight credit conditions do not appear to be affecting most firms’ ability to attract new credit. Yet cautious lending practices are having what appears to be a significant impact on the construction market.
As the commercial construction industry remains mired in a downturn that began in earnest in 2008, they continue to evolve their equipment strategies. Instead of purchasing new equipment, many firms report leasing.
Construction firms continue to be squeezed between rising materials costs and stagnant earnings for work provided in 2011, a trend that is likely to continue this year.
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