Fall 2016 issue of Horizons

National Construction Employment Statistics

30%

7,000

22.7%

20.7%

6,597

6,301

20%

6.000

UNEMPLOYMENT RATE (%)

15.3%

13.5%

10%

5,000

16.0%

11.4%

8.3%

15%

4,000

7.5%

NUMBER OF EMPLOYEES (THOUSANDS)

3,000

0%

6,701

5,654

5,611

5,728

5,939

5,467

2008

2013

2009

2010

2011

2012

2014

2015

Source: United States Department of Labor, Bureau of Labor Statistics

glass (5.9%), cement (5.6%) and gravel/crushed stone (5.7%).

∙ On average for all clients, backlog increased on average 40.0% from 2014 to 2015

However, other key components have seen significant declines including diesel fuel (-34.6%), steel mill products (-19.2%) and copper and brass mill shapes (-17.6%). While the industry saw slight increases in some key components, the drastic decreases in other key components should help mitigate the increases in wages being offered due to the labor shortage. Key Client Metrics Upon examining data from RubinBrown’s client base of general contractors, subcontractors and specialty contractors in Colorado, Kansas, Missouri and Illinois, we noted several trends: ∙ For contractors with more than $100 million in annual revenue, average gross profit decreased from 13.0% in 2014 to 12.2% in 2015 ∙ For contractors with less than $100 million in annual revenue, average gross profit decreased from 19.1% in 2014 to 18.8% in 2015

Economic Forecast In looking at the crystal ball, the next two years appear to get even brighter from a spending standpoint. Ken Simonson, the Chief Economist of AGC of America, estimates that total construction related spending in the U.S. will increase 6.0 – 9.0% in 2016 and another 5.0 – 7.0% in 2017. Specifically, he estimates that both private residential and private non-residential will increase 5.0 – 10.0 % and 5.0 – 8.0% in 2016 and 2017, respectively. Simonson further estimates that multi-family residential spending will increase 8.0 –12.0 % in 2016 while single family residential spending will only increase 6.0 – 9.0%. He cited that multi-family growth is primarily driven by low vacancies and the increasing popularity of the urban areas.

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