Gilbane: Construction spending growing now, will keep climbing

GILBANE CONSTRUCTION is seeing continued growth in both commercial and residential construction over the next 18 months, such as the work being done by Luiz Perez of Castro Drywall at the East Side's Premier Apartments building in the summer of 2013. / PBN FILE PHOTO/BRIAN MCDONALD
GILBANE CONSTRUCTION is seeing continued growth in both commercial and residential construction over the next 18 months, such as the work being done by Luiz Perez of Castro Drywall at the East Side's Premier Apartments building in the summer of 2013. / PBN FILE PHOTO/BRIAN MCDONALD

PROVIDENCE – The U.S. construction market will grow significantly over the next 18 months, with spending increasing 7 percent in 2015, Gilbane Building Co. estimates in a report issued Wednesday.

The report said the average annual rate of non-residential construction was $197 billion over the past four months, compared with $146 billion over the same period in 2013. Construction spending is expected to finish 2014 5.5 percent higher than 2013, with further acceleration expected next year.

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Despite the improved climate, however, the market will be slowed by a shortage of skilled workers, according to Gilbane.

“Very active markets will drive escalation to climb more rapidly than we have seen in six years,” said Gilbane Estimating Executive Ed Zarenski in announcement with the report. “The challenge of anticipated workforce shortages will have a detrimental effect on labor cost, productivity, the ability to readily increase construction volume and the ability to complete projects on time.”

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The report said construction employment is 11 percent higher than at the low point of the recession, but 40 percent of additional labor has been the result of longer hours for existing workers instead of new hires.

The construction sector unemployment rate has fallen to 7.5 percent, the report said.

The increase in construction spending in 2015 will be led by commercial and office buildings, which will rise 15 percent, followed by a 12 percent increase in residential construction, the report predicts. That will be partially offset by a 5 percent decline in non-building infrastructure.

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