Page 60 • January 15, 2020 • www.constructionequipmentguide.com • CONSTRUCTION EQUIPMENT GUIDE
Experts Eye Highway Work as Strong Sector in 2020 FORECAST from page 1
“Total growth in nonresidential construction spending, as reported by the Census Bureau’s monthly ‘value put in place’ series, will be close to the 2.2 percent increase recorded year-to-date for the first 10 months of 2019 compared to January-October 2018,” he said. “The best-performing segments in 2020 are likely to include highway and street construction, transportation facilities — airports, transit, ports and railroads — and power and energy — solar and wind, possibly including offshore wind, and pipelines.” Simonson predicted the weakest construction category will be retail again in 2020, but the retail portion of mixed-use facilities, such as airport terminals and office buildings, will be the exception. He believes lodging construction is at risk of a pullback due to overbuilding or a possible rise in interest rates, while warehouse construction will continue shifting away from huge distribution facilities at the fringe of metro areas to smaller “last-mile” or “click-and-collect” structures inside metro areas. These projects will be more expensive per square foot but may not cost more in total, he added. After decelerating over the course of 2019, the U.S. economy appears poised to soften further in 2020, ELFF reports in its 2020 Equipment Leasing & Finance U.S. Economic Outlook. “Overall, we expect the economy to grow 1.7 percent in 2020 (down from an estimated 2.3 percent in 2019), while we project that equipment and software investment will expand 1.1 percent (down from an estimated 3.6 percent in 2019),” states the report’s bottom line. Healthy Equipment Sectors Asked which construction sectors are the healthiest at the opening of 2020, AGC’s Simonson reported the highway, transit, and airports sectors “have benefitted from several years of state and local legislative and voter approvals of gas tax or other revenue increases and bond issues.” In fact, the U.S. transportation infrastructure market is expected to grow at least 5 percent in 2020, according to the annual economic forecast of the American Road & Transportation Builders Association (ARTBA). “The real market growth for 2020 is being fueled by increased transportation investments from federal, state, and local governments,” said Dr. Alison Premo Black, ARTBA chief economist, who conducted the analysis. She predicts total domestic transportation construction and related-market activity in 2020 should reach $300.4 billion, up from 2019’s $286.5 billion, after adjusting for project costs and inflation. The transporta-
The transportation infrastructure market is expected to grow at least 5 percent next year, according the American Road & Transportation Builders Association. Increased transportation investments from federal, state and local governments are helping to grow the sector.
“The best-performing segments in 2020 are likely to include highway and street construction, transportation facilities — airports, transit, ports and railroads — and power and energy — solar and wind, possibly including offshore wind, and pipelines.” Ken Simonson Associated General Contractors
tion construction market grew by 8 percent in 2019, the result of gains in highway, street and pavement work, which grew by $9.6 billion, according to Black. Airport construction work on runways and terminals increased by less than 1 percent in 2019 but was still at record investment levels. Likewise, strong growth in the subway, light rail, and mass transit sector, as well as private railroad investment helped support a strong year for transportation construction activity. Overall, transportation construction market activity is expected to increase or be steady in about half of the states, according to the ARTBA report. Some of the largest markets, expected to remain stable or grow, include Texas, California, Illinois, New
York, Florida, North Carolina, Washington, Minnesota, Michigan, Arizona and Wisconsin. The report also noted that the real value of public highway, street and related construction investment by state transportation departments and local governments — the largest market sector — is expected to increase by 6 percent to $77.5 billion after growing 15 percent in 2019. Construction work on private highways, bridges, parking lots and driveways will increase from $69.1 billion in 2019 to $71.8 billion in 2020 and will continue to grow over the next five years as market activity increases in those sectors. The pace of bridge and tunnel construction work stayed flat in 2019 and is forecast to grow by $800 million, or 3 per-
cent, in 2020. Bridge and tunnel market activity fell slightly from $28.8 billion in 2018 to $28.6 billion in 2019, after adjusting for project costs and inflation. Public transit and rail construction are expected to grow to $24.2 billion in 2020, a 5 percent increase. Subway and light rail investment are expected to reach a new record level, increasing to $11 billion. Airport terminal and related construction work, including structures like parking garages, hangars, air freight terminals, and traffic towers, is estimated to increase to $19.6 billion. Runway work is forecasted to increase to $4.9 billion in 2020. Simonson of AGC also believes the renewable power market is healthy. see FORECAST page 68