Overall, the construction industry has experienced far from rapid growth in 2016. With oil prices low, major capital projects from firms involved in the energy and power industry saw low demand, correlating to a lackluster year within the greater engineering and construction sector. Total construction spending growth from a year ago, including residential and nonresidential, has lagged, hitting the lowest level of year over year growth since 2012. Specifically, business fixed investment growth, which includes investment in property, plant and equipment, has reflected the pessimism of today’s construction environment, remaining very soft over the past year. A major trend impacting the residential, particularly single-family, construction industry has been demand. Millennials, with their urban attraction and debt-aversion, have much preferred renting to home owning.
It’s hard to not mention President Trump’s $1 trillion infrastructure spending plan when discussing public construction. Uncertainty surrounding magnitude and time table make this hard to predict, given that it took Congress over 10 years to pass its current long-term funding plan, which amounted to 1/3 the size of the proposed plan and half the time horizon. One part of Trump’s infrastructure plan that has really excited the construction industry is collaboration. The promotion of public-private partnerships might give the construction industry the boost it needs to return to its pre-recessionary glory. Regardless of the exact magnitude or timeline, policy makers on both sides of the aisle agree that significant investment into the crumbling infrastructure of the US is desperately needed, and quickly. The $124 billion municipal construction industry has experienced lackluster performance in the past 5 years, with only 0.3% of annual growth. Funding for many public projects has stalled amongst economic concerns, and growth in the industry is projected to remain modest for the next 5 years.