Hot tech markets and hurricane repairs maintain momentum
The USA enjoyed accelerated economic activity towards the end of 2017, which should propel GDP growth in 2018 to 2.6 percent after the 2.2 percent rise in 2017. This momentum is likely to continue, boosted by proposed tax changes and extra spending to repair hurricane damage. Inflation remains low at 1.3 percent and unemployment has dropped to 3.9 percent.
In the major cities construction is expected to benefit from increased spending to repair hurricane damage, for example in Texas and Florida, and continued expansion in the high-tech and residential sectors.
Houston’s underlying economic fundamentals suggest gradually expanding activity throughout 2018. Repairing damage caused by Hurricane Harvey should boost growth in construction, which will offset a recent residential market slowdown.
Meanwhile, in San Francisco, a spate of tech companies building offices has pushed up both land values and contractors’ prices. With top contractors engaged by tech clients throughout the Bay Area, commercial developers and other clients either struggle to find builders or pay a premium.
In Seattle construction is likely to come under pressure. Contractors’ profit margins are said to be shrinking, with labour rates and material prices rising.
|Cost escalation 2017–18:||5.0%|
|Cost escalation 2018–19:||5.0%|
|Location factor (USD):||122.5|
High-tech is a big growth driver but rests on the availability of skilled tech talent. This may be affected by the administration’s policy reforms around immigration.
This content is part of the International construction market survey 2018