2016 AGC Outlook Survey: Most contractors expect some growth in Illinois market, with labour shortages and rising costs

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The Associated General Contractors (AGC) says most, but not all Illinois contractors expect 2016 will be a good year.
The AGC’s annual members survey indicates, for example, that about 70 percent of its members expect to increase headcount in 2016 – while about 23 percent believe there will be no change and eight percent indicate a decline.

See detailed Illinois survey data here

These numbers are in line with the national survey figures, which say that 71 percent expect headcount increases.

Illinois contractors indicate they expect growth in most of the major industry sectors – a net 21 percent increase – with the biggest increases (in brackets) predicted for higher education (35 percent), K-12 School (29 percent) and hospitals (26 percent) Other growth sectors include public building (19 percent), retail, warehouse, lodging (15 percent), private office (15 percent), and power (7 percent.)

The biggest declines are expected for highway (36 percent), water/sewer (27 percent), federal projects (21 percent), other transportation (rail, transit, airport) (14 percent) and manufacturing (9 percent). Multifamily residential is expected to stay the same.

Nationally, “the construction industry will continue to recover in 2016 as many firms add to their headcount amid growing demand in a range of private and public sector markets,” said Steven E. Sandherr, the AGC’s chief executive officer. However, he also said “the industry also faces a number of challenges that have the potential to dampen, and possibly even undermine, the sector’s recovery.”

Labor shortages may put a brake on the industry’s optimistic projections. “What is particularly striking about the findings on workers shortages is that they are consistent with the responses from last year’s outlook,” said Ken Simonson, the association’s chief economist. “In other words, after a year of raising pay and increasing benefits, contractors remain as worried about the lack of qualified workers as they were at the beginning of 2015.”

In addition to coping with worker shortages, contractors are also worried about the continued increase in health care costs.

Nationally, 39 percent of contractors report they are worried about the continued expansion of federal regulations while 34 percent report they are worried about the growth in state and local red tape, association officials said.

“As long as local, state and federal officials are willing to act on our workforce measures, embrace a more rational approach to regulations, identify measures for controlling healthcare costs and protect e-commerce, the industry should continue to expand,” Sandherr said, referring to policy proposals the association is making. That is precicely why we will continue to focus our energies on ensuring the continued growth of this industry.”

The Outlook was based on survey results from more than 1,500 construction states from all 50 states and the District of Columbia. Varying numbers responded to each question. Contractors of every size answered more than 30 questions about their hiring, workforce, business and information technology plans.

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