USA construction market 'past its peak'

The US construction sector appears to have passed its peak, with performance slowing despite an optimistic outlook across the sector. 

Mace – the leading international consultancy and construction company – has published its latest tender cost update for the American construction sector. The report indicates that the market will begin to slow in 2018 as demand eases away after a peak driven by recovery since the financial crisis. 

The research suggests that industry capacity is unlikely to be able to stretch much more to meet demand without seeing significant inflation. This is due to rising materials prices – exacerbated by the likelihood of new trade tariffs – and a tight labour market that could suffer further from any new restriction on immigration. 

This is despite significant optimism in the market place; with more than 44% of respondents to the regular Association of General Contractors (AGC) survey saying they expect demand for construction services to grow this year. The data suggests that this optimism may be driven by current workloads rather than a realistic forward view. 

Brian Moran, Mace’s Associate Director of Cost Consultancy, said: 

“Despite optimism in the market, we anticipate a slowdown and stabilisation in construction demand across the US to a lower level than recent years. With more competition for work in many areas alongside growing labour and materials costs, at least some erosion in margins is expected in 2018 in all but the hottest markets.”