ConDig (04-Jan-18).  A new survey has found that 75% of US construction companies expect to recruit more staff this year amid a growing sense of optimism surrounding the industry.

The bullish tone is being partly driven by a belief that economic conditions are set to remain strong as tax rates and regulatory burdens are reduced, according to the Associated General Contractors of America (AGC) and Sage Construction & Real Estate.

But many firms report they remain worried about current workforce shortages plaguing the construction industry and infrastructure funding.

“Construction firms appear to be very optimistic about 2018 as they expect demand for all types of construction services to continue to expand,” said Stephen E. Sandherr, AGC’s chief executive officer.

“This optimism is likely based on current economic conditions, an increasingly business-friendly regulatory environment and expectations the Trump administration will boost infrastructure investments.”

Association officials noted that 75% of firms say they will increase their headcount in 2018, up slightly from 73% last year. Most of the hiring will only expand headcounts by a slight percentage per firm, however. Half of firms report their expansion plans will only increase the size of their firm by 10% or less.

Meanwhile, only five percent of firms report plans to expand their headcount by more than 25% above their current size. Only three percent of respondents expect to reduce headcount, down from six percent last year.

Respondents are very optimistic about demand for all types of construction services as measured by the net positive reading – the percentage of respondents who expect a market segment to expand vs. the percentage who expect a market segment to contract. The net positive reading for all types of construction is 44%, the highest yet recorded.

Broken down by market segment, contractors nationwide are most optimistic about the private office market segment, with a 22% net positive reading. This is followed by the other transportation and retail, warehouse & lodging segments, both of which had a 21% net positive reading. Water & sewer construction had a net positive reading of 20%; K-12 construction had a net positive reading of 18% and highway and hospitality construction both had a 17% net positive reading.

But there was less positivity over other sectors, with a 16% net positive for both multifamily residential and public building segments, followed by a 13% net positive reading for power construction, an 11% net positive for higher education construction and an 8% net positive for federal construction.

Even as firms expand headcount, an overwhelming majority, at 82%, of firms expect it will either become harder, or remain difficult to recruit and hire qualified workers in 2018, up from 76% last year. In addition, 78% of firms report they are currently having a hard time finding qualified workers to hire, up from 73% at the start of last year.

Firms continue to take steps to address these growing workforce shortages and 60% report they have increased base pay rates, up from 52% last year. Thirty-six percent have provided incentives and/or bonuses, up from 35% last year. Twenty-four percent have increased contributions and/or improved employee benefits to cope with workforce shortages. Meanwhile, 56% of firms report they plan to increase investments in training and development, up from 52% at the start of 2017.

“While workforce issues remain their top concern, many contractors are also worried about competition and the impact of decisions made in Washington on their operations,” said Ken Simonson, the association’s chief economist.

He noted that 39% of firms said increased competition for projects was one of their biggest concerns for the year. Meanwhile, 28% of firms listed growth in federal regulations as one of their top concerns and 24% said one of their concerns was a lack of new infrastructure investments.