“The infrastructure bill will help public-sector construction projects outpace the private sector again in 2024,” according to Richard Branch, chief economist at Dodge Construction Network. Branch projects the total value of construction starts in 2024 to rise 7% to $1.206 trillion after climbing 1% in 2023.

Double-Digit Growth

Highway and bridge construction is expected to increase 23% to $147.1 billion this year, the largest gain of any construction sector, Mr. Branch said. That follows a 14% increase to $119.5 billion in 2023, he said. “The dollars flowing from the infrastructure act are coursing into the system and causing double-digit growth across most of our infrastructure categories, whether it’s highways, bridges, water or sewer,” he said. “There’s really tremendous opportunity in the infrastructure markets. Publicly-funded construction did rather well last year, and I continue to think that the public side of the market will outgrow the private side.”

Transportation Construction

The IIJA funded many projects that are now in the construction phase, and many states have stepped up their investment in transportation infrastructure through bond issues, business taxes, general fund transfers and user-fee increases, according to Alison Premo Black, Ph.D., senior vice president and chief economist of the American Road & Transportation Builders Association (ARTBA).

The total value of transportation construction work in the United States this year will grow 14% to $214 billion, Dr. Black said. That figure includes spending on airport terminals and runways; bridge and tunnel work; public transit and rail construction; and ports and waterways.

Ms. Black said spending on highway and bridge construction in 2024 will rise 16% to $152.3 billion, following a 15% increase in 2023. Activity in the transportation construction market is expected to increase or remain flat in 38 states this year, with Texas, Florida, Georgia and New York among the strongest markets, she said.

Highway work is projected to rise 15.9% this year after climbing 16.4% in 2023, while bridge construction will surge 17.3% in 2024 after experiencing an 8.2% boost in 2023, Ms. Black said.

Labor & Materials Changing Approach

Uncertainties surrounding the costs of labor and materials likely will lead operating stakeholders to consider retrofitting and modernizing bridges rather than building new ones, according to Misha Nikulin, managing director in the industrial products and construction division at Deloitte Consulting.

“Material-cost increases will drive more creativity in design and construction, including more creative modularization and prefab,” he said. “With growth in sustainability projects, opportunities with ‘green concrete’ will be explored more for roads and highway considerations.”

Other Sectors

Mr. Nikulin said robust growth in other construction sectors will lead to “more localized road projects” to support new facilities in 2024. Construction starts on environmental and public-works projects, for example, are expected to climb 10% this year to $83.1 billion, according to Dodge Construction Network. That’s on top of a 16% gain in 2023.

Other construction sectors projected to see strong growth in 2024 include hotels and motels (17%), manufacturing (16%), multifamily housing (14%), single-family housing (9%) and stores and shopping centers (9%), according to Dodge.

Potential Good News For Interest Rates

High interest rates are weighing down the construction industry, especially private-sector projects, but the Federal Reserve likely is done raising rates now that inflation appears to be under control, Mr. Branch said. Modest interest-rate cuts could begin as early as July and continue at a measured pace through 2026, lowering borrowing costs and fueling construction activity, he added.

“We all know that the construction sector is one of the most interest-rate-sensitive sectors in this economy,” Mr. Branch said. “These high interest rates will keep growth, particularly in the private side of the market, subdued for 2024. That easing of monetary policy is going to be very slow and methodical. They’re going to take their sweet time to make sure they’ve truly got that inflation monster beat down.”

What Happened

Highway construction work continued to increase as end of year 2023 data rolls in—the total value of highway activity was $9.2 billion in November, an increase of 16 percent compared to November 2022. Year to date (YTD), the value of work is $102.8 billion, up 17% over 2022 (see chart.) Bridge work was also up in November (+14%) and YTD (+10.6%).

Why it Matters

Current market activity—or the Value of Construction Put in Place—is released by the U.S. Census Bureau and tracks the work completed on a project each month, regardless of the total size of a project or when it was awarded. As projects funded by the Infrastructure Investment and Jobs Act (IIJA) are put out to bid and contractors start to work, the value of construction and overall market activity has also increased.

ARTBA noted on Jan. 12 the “Blistering Pace for Construction Activity,” based on the increases indicated in the latest 2023 data of highway construction work at the end of last year. The total value of highway activity was $9.2 billion in November, an increase of 16% compared to November 2022. Year to date (YTD), the value of work is $102.8 billion, up 17% over 2022 (see chart.) Bridge work was also up in November (+14%) and YTD (+10.6%).

The current market activity —or the Value of Construction Put in Place—is released by the U.S. Census Bureau and tracks the work completed on a project each month, regardless of the total size of a project or when it was awarded. As projects funded by the Infrastructure Investment and Jobs Act (IIJA) are put out to bid and contractors start to work, the value of construction and overall market activity has also increased, ARTBA concluded.