New Report: Construction Spending on the Rise for 2016

Spending on U.S. construction is expected to continue to increase in 2016, though at a slower rate than seen in 2015, according to a new report.

Fitch Ratings predicts continued stable growth for construction spending throughout the United States in 2016. The company presented its findings in its 2016 outlook report, cited in an article on the website Business Wire.

However, growth rates for 2016 are expected to be lower than those experienced in 2015. Fitch notes that construction spending increases in 2015 were particularly strong.

Even if the 2016 growth rates don’t equal those from the previous year, Fitch still sees a healthy expansion for building services and home products over the next twelve months.

The Business Wire article notes that Fitch expects new home and commercial construction to expand 8 percent in 2016. Home improvement and public construction spending is anticipated to experience moderate growth, fueled in part by the recent $305 billion highway bill.

Building materials companies could see an increase in revenues of 5 to 7 percent in 2016, according to the Fitch report. Improvement in profit margins, better cash flow among customers, and reduced debt is also expected to help boost the income of building materials suppliers.

Despite the good news on U.S. construction spending, Fitch warns that there could be some factors that have the potential to keep the expected growth to a slower rate. The Business Wire article quoted director Robert Rulla as saying that construction industry labor shortages, higher labor costs in general, and delays in beginning and continuing projects could slow 2016’s expected spending growth.

Fitch Ratings is a division of Fitch Group, an international leader in financial information services. Fitch Ratings focuses on credit ratings and business information and research.

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