Contractors expect demand to expand in every market segment next year
Arlington, VA – Most construction firms expect demand for their services and hiring will expand in 2020, and even more firms are worried about their ability to find qualified workers to hire, according to survey results released by the Associated General Contractors of America and Sage Construction and Real Estate. The findings are detailed in the Strong Demand for Work Amid Stronger Demand for Workers: The 2020 Construction Hiring and Business Outlook Report.
“Contractors are very optimistic about demand for construction in 2020,” said Stephen E. Sandherr, the association’s chief executive officer. “At the same time, many construction executives are troubled by labor shortages and the impacts those shortages are having on operations, training and safety programs, and bottom lines.”
The percentage of respondents who expect a market segment to expand exceeds the percentage who expect it to contract for all 13 categories of projects included in the survey.
For every segment, between 27 and 36% of respondents expect an increase compared to 2019 in the dollar value of projects they compete for. Meanwhile, between 11 and 21% of respondents foresee less work available in 2020. The difference between the positive and negative responses – the net reading – was between 8 and 25% for every category.
Water and sewer construction scored the highest net positive reading of 25%. Four other segments had a 20% net positive: bridge & highway, K-12 school, hospital construction, and transportation (transit, rail and airport). Power projects and federal construction projects had a net positive reading of 17%. Higher education construction had a net positive reading of 16%.
Five categories had slightly less positive net readings: multifamily residential construction and manufacturing construction, both 11%; public building construction, retail, and warehouse and lodging construction, all at 10%. The lowest net positive reading was for private office construction, at 8%. Overall, respondents were more optimistic than a year ago regarding institutional and most public categories but less optimistic about private-sector nonresidential segments.
Most contractors plan to add staff in 2020 to keep pace with growing demand. Seventy-five percent of firms plan to increase headcount this year, similar to the 77% with this expectation at the start of 2019 and 75% at the start of 2018. However, 52% of firms report their expansion plans will only increase the size of their firm by 10% or less. About 19% of respondents plan to increase headcount by 11 to 25%. Only 5% of respondents plan to increase employment by more than 25%.
