US Construction Sector
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 801,704 construction sector establishments are involved in the clearing and preparation of land; building of structures and infrastructure; installation of mechanical systems, nonstructural components and finishings; and the remodeling and expansion of existing structures. The sector is segmented into construction of buildings (residential and nonresidential), heavy and civil engineering, and specialty trades.
Dependence on the Economy and Market
Demand for construction is highly dependent on economic health and can vary considerably across markets.
Seasonal and Weather-Related Factors
Seasonality and weather conditions affect project timelines and contractors’ ability to perform work.
Industry size & Structure
The construction sector is comprised of 801,704 establishments that employ 8 million workers and generate $3 trillion in annual revenue, according to government sources.
- The construction sector represents 4% of the nation's Gross Domestic Product (GDP) and employs 5% of the country's workers.
- The specialty trade contracting segment is highly fragmented: the 50 largest specialty trade firms represent 7% of segment revenue. The 50 largest building construction firms represent 20% of segment revenue; the 50 largest heavy and civil works firms represent 26% of segment revenue.
- The construction sector has a high volume of independent contractors with no employees. The number of nonemployer establishments is about 837,826 in building construction, 38,909 in heavy and civil works, and 1.8 million in specialty contracting. The owner of nonemployer establishments typically performs the work or subcontracts labor for large or complex jobs.
- The construction sector shed 78,000 establishments in 2021, which equals about 8.5% of existing establishments, according to the Bureau of Labor Statistics. However, the industry added 98,000 new establishments, which is equivalent to 10.7% of existing establishments. As a result, the construction sector has an average growth rate of 2.2%.
- The construction sector is forecast to grow its employment base by 2.8% overall in 2021-2031, which is lower than the national average of 5.3% for all jobs, according to the Bureau of Labor Statistics.
Industry Forecast
US Construction Sector Industry Growth
Recent Developments
Oct 3, 2024 - US Construction Spending Drops
- The total value of US construction put in place fell 0.1% in August 2024 compared to the prior month, according to the US Census Bureau. Residential spending declined 0.3% and nonresidential spending increased 0.1%. Nonresidential spending was mostly supported by public infrastructure projects. Conservation and development spending increased by 2.2% in August, while highway and street projects saw a 0.9% increase in spending. In the nonresidential buildings segment, growth was led by communication, which saw growth of 1.3%. Amusement and recreation spending increased 0.9%, and lodging spending rose 0.8%. Spending on public safety projects grew by 0.6%, and healthcare spending rose by 0.1%. Construction spending for office, manufacturing, and transportation each rose 0.1%. Commercial spending fell 0.5% in August, while educational and office spending fell 0.2% and 0.1%, respectively.
- On October 1, 2024, thousands of US dockworkers at ports stretching from Texas to Maine went on strike for higher wages, according to The Wall Street Journal. Workers represented by the International Longshoreman’s Association (ILA) seek a 77% wage increase over six years. The ILA rejected an offer by the United States Maritime Alliance with a 50% wage increase over six years and improved benefits. Shipping industry observers say the port shutdowns will reduce imports used in construction, including construction materials and heavy machinery. Equity analysts at JP Morgan estimate the port strike could cost the US economy between $3.8 billion and $4.5 billion per day.
- According to a recent report by the US Department of Transportation (DOT), only 40% of the $550 billion in new spending funded through 2021’s Infrastructure Investment and Jobs Act (IIJA) has been announced, suggesting a lag in progress. The funds provided through the IIJA will be available until they are spent, so the funding could go beyond the law’s five-year scope. However, securing IIJA funding is cumbersome, as it flows from more than 400 programs through federal, state, and local entities. Analysis of White House data by CNBC suggests the bulk of IIJA funding has gone to road and bridge projects, followed by rail, broadband, power, and water projects. According to the DOT report, IIJA funding has been announced for 10,200 bridge projects, 1,000 airport projects, 500 port and waterway projects, 170 rail projects, and 11,200 public transit projects.
- Extreme heat and flooding brought on by climate change are taking a toll on US bridges, according to The New York Times. About a quarter of US bridges were built before 1960, and they were not designed to withstand large and sudden temperature changes which can cause materials to weaken as they expand and contract, according to some engineering experts. According to an estimate by science and medicine journal PLOS ONE, extreme heat could cause 25% of steel bridges in the US to collapse by 2050. Other studies suggest “bridge scour,” whereby heavy rains cause soil erosion around bridge foundations, is the leading cause of bridge failure in the US. The bipartisan infrastructure law passed in 2021 includes $110 billion for bridge, road, and other transportation repairs and upgrades.
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