The construction industry has positioned itself in a unique spot in the American economy – it is absolutely critical for overall success, but it also ebbs and flows with the weather, consumer sentiment and a variety of other financial factors.
Even though construction is so important, the sector is placed in a delicate balance with the national economy, as both rely so heavily on each other for growth. As a member of the construction industry, you are well aware of the pros and cons of the profession, and you no doubt spend plenty of time analyzing economic statistics and other data relevant to your company.
However, you also have clients and other responsibilities to deal with that make it challenging to stay up to date with current events. At Clark Schaefer Hackett, we know just how valuable your time is, and to relieve some of that burden – while ensuring you remain knowledgeable about industry trends and developments – we’ve been monitoring the construction sector as well.
Recently, several noteworthy events have taken place that could directly impact your company. To make things easy for you, we’ve compiled a few that might interest you:
Former Fed Chairman highlights construction woes
Alan Greenspan, the former Chairman of the Federal Reserve, highlighted the struggles of the construction industry as it relates to the economic recovery at a recent industry conference, according to Bloomberg.
At the New York-based insurance conference, Greenspan put some of the blame on the weak economic resurgence on this sector, explaining that strong construction activity is a necessity for the recovery to continue uninterrupted.
“What we see is that construction is dead in the water,” Greenspan said. He added that every recovery since World War II had high levels of construction activity, and that “every single one of them was led by construction or longer-lived assets.”
Greenspan pointed to uncertainty about the future as one reason why the economy is struggling. A lack of clarity has prevented many businesses from investing back into industries such as construction.
Demand for construction on the rise
While Greenspan is concerned that construction levels aren’t where they need to be, other industry reports show that activity is on the rise in this sector. In fact, a study from the Associated General Contractors of America showed that construction spending hit its highest point since the end of 2008.
In the analysis, the AGC of America explained that all significant categories of construction spending ticked up this past July, with total construction spending reaching a seasonally adjusted annual rate of $981 billion. That represents a 1.8 percent rise on a monthly basis.
“It is encouraging to see signs of a broad-based recovery in private construction along with a recovery – at least for now – in public construction investment,” Ken Simonson, AGC of America’s chief economist, said in a statement. “Private nonresidential construction should remain strong through the rest of 2014 and beyond, while residential spending is likely to keep growing, though at a more moderate pace. However, funding is still inadequate for needed public infrastructure improvements.”
Job gains reported for construction industry
Not only is spending on the way up, but so too is construction employment. A separate report from the AGC of America illustrated that this sector has added roughly 20,000 new jobs in August, a five-year high.
Simonson stated that this growth over the past year has been the largest increase since 2006 – and employment opportunities are appearing in residential, nonresidential and heavy construction.
Furthermore, the industry’s unemployment rate dropped to 7.7 percent, while the total number of employment opportunities in this sector hit more than 6 million in August.
In all likelihood, more growth in construction will be needed for continued economic recovery. While the winter is fast approaching, job gains are strong and other conditions appear favorable. Should you need any assistance, however, please contact us at Clark Schaefer Hackett. With our trusted advisors, you’ll have access to a wide range of services, from consulting and succession planning to tax advising and much more. Feel free to inquire with any questions or concerns you may have.