Caution is still the watchword

A leading United States economist specialising in the construction industry has urged caution after a survey backing the new pro-jobs mood established in the early days of the Trump administration.

Ken Simonson, chief economist at the Association General Contractors of America (AGC) told delegates at the National Demolition Association’s annual convention that a confidence survey among almost 1,300 members spread across 92 chapters of the trade body revealed an unprecedented positive outlook.

It found a huge 36% balance of companies feeling more positive about prospects for their industry than they did a year ago.

The survey was also unique in that all 13 categories of the industry, in public, private, residential non-residential construction, produced a positive net response.

However, Ken said that despite increases in the past 12 months, both spending and employment in the industry are still below the peak set in 2011.

He also warned of a number of areas of uncertainty which could still pose problems for the industry.

“A lot of people in the media said companies were holding off in the run up to the election because of uncertainty before they knew the result,” said Ken.

“I didn’t buy that at the time and now we have a result there is more uncertainty than there was before.

“Take infrastructure – we have been told there will be $1 trillion over 10 years, but we haven’t seen how that will be paid for. We agree it should be replaced, but there is not much willingness at government level to pay for new infrastructure through taxes.

“Immigration – the country has relied heavily on immigrant workers, but we could be reducing the pool of workers or driving others out. The number of Americans retiring is about the same as the numbers coming in, which threatens growth rates.

“Companies will increase production in the US, but if other countries introduce trade tariffs, that will lead to higher materials costs and shortages.”

Other areas of uncertainty, said Ken, include regulatory reform and fiscal and monetary policy.

“Monetary policy is directly being affected by the new uncertainty. We have to see how much of the spending plans and tax cut plans actually go forward,” he added.

Despite this, Ken said growth of between 2 and 6% was possible, reflecting some of the positivity shown by AGC members.