According to Kermit Baker, chief economist for the American Institute of Architects, "market fundamentals for major construction sectors are generally positive and point to further growth." For the nonresidential segment, architectural billings, a leading indicator of construction activity, "are seeing strongest growth since the downturn began."
Baker says expectations for growth in the segment are good, "not great," for 2013 and 2014. Total nonresidential construction is forecast to increase 5 percent in 2013, and 7.2 percent in 2014. By segment, commercial construction will lead the recovery, and is expected to increase 8.6 percent in 2013, and 10.7 percent in 2014. Institutional is forecast to see slight gains—1.2 percent in 2013 and 4.7 percent in 2014.
Ken Simonson, chief economist for AGC of America, said the construction industry should be aware of three general trends that will continue to hold down construction growth:
•Reduction in government spending for schools and infrastructure
•A consumer switch from buying in stores to online purchasing
•A reduction from employers in office space per employee
Additionally, the industry should prepare for increasing costs, Simonson said. He projects material costs will increase 3 percent to 8 percent from 2014 to 2017, and labor costs will increase 2 percent to 5 percent. Bid prices are expected to rise between 2 percent and 5 percent, he said.