Most U.S. construction firms will expand their payrolls this year due to optimism across all market segments, according to survey results in the Associated General Contractors of America (AGC) and Sage Construction and Real Estate’s 2017 Construction Industry Hiring and Business Outlook. However, many firms remain worried about the availability of qualified workers, as well as rising health and regulatory costs.

“Contractors expect every segment of the construction market will drive demand for construction services in 2017,” AGC chief economist Ken Simonson said during a media conference call Tuesday. “In fact, five times as many respondents (46 percent) expect the overall construction market to grow as the share who expect it to shrink, with the remainder expecting the market to remain roughly the same as in 2016.”

As measured by a net positive reading—percentage of respondents who expect a segment to expand compared to the percentage who expect it to contract—respondents are most optimistic about the outlook for the hospital and the retail, warehouse and lodging segments, with private office closely behind.

Respondents are more optimistic about public sector markets than they were a year ago, with growing positivity in the educational segment.

“The only market segment where contractors are less optimistic this year than they were last year is the multifamily residential sector,” said Simonson, noting that this is consistent with recent declines in multifamily construction starts and permits.

Similar to last year, nearly three out of four construction firms say they will increase their headcount in 2017, according to the report. That hiring, however, will likely only lead to minor increases in the overall size of most firms. Only 6 percent of firms report they will expand their headcounts by more than a quarter. Very few firms plan reductions in their total headcounts in 2017.

“It is possible that one reason firms expect to make only slight increases to their headcounts is that they appreciate how difficult it will be to find enough qualified workers to hire,” said Simonson.

Seventy-three percent of firms say they are having a hard time finding qualified workers, including salaried and craft professionals, and 76 percent of respondents predict that labor conditions will remain as tight, or get worse, during the next year.

“Most firms report they are increasing pay or benefits to retain or recruit qualified staff as a result of these worker shortages,” according to the report. “…Even as firms increase compensation, they are also investing in training and development programs for current and new workers.”

More than half of firms plan to increase their investments in training and development in 2017 compared to 2016.

As contractors worry about competing for workers, they are also concerned about the tight margins that come from a competitive marketplace. Forty-eight percent of firms cited increased competition for projects as among their major concerns. They are apprehensive about the continued expansion of regulatory burdens and the growing cost of compliance as well.

“Contractors are also concerned about the outgoing administration’s move away from the collaborative safety approach that proved so effective since it was introduced by federal safety officials in the mid-1990s,” the report reads. “The current administration has instead opted to spend less time educating contractors on safe practices and more time penalizing them for infractions.”

Credit and lending conditions continue to remain mostly positive for construction firms and developers, according to the Outlook survey results. As with last year’s report, only four percent of firms reported having a harder time getting bank loans compared to a year ago.

Healthcare costs continue to climb for the vast majority of construction firms. Eighty-four percent report the cost of providing healthcare for their employees increased in 2016. In addition, a majority of construction firms report they plan to expand the number of fleet vehicles they operate in 2017. “While some of this likely represents replacement of existing fleet vehicles, many firms are likely expanding their fleets as they address growing demand for construction services,” according to the report.

The national survey results can be found here, and the report here.