Construction contractors are more upbeat about business prospects for 2014 than in recent years, but they still have concerns about labor supply and the rising costs of items such as materials and health care, according to a new Associated General Contractors of America survey.

The survey results, which AGC released on Jan. 21, show that many firms intend to resume adding workers this year, although the increases will be small: 86% of the firms that reported said they each plan to hire 25 or fewer workers in 2014.

ACG CEO Stephen Sandherr told reporters in a conference call on the group’s annual hiring and business outlook that contractors are “more optimistic about 2014 than they have been in a long time.”

Ken Simonson, AGC chief economist, said he expects the dollar volume of construction put-in-place to climb to the 8% to 10% range this year, compared with a 5% gain for the first 11 months of 2013.

Simonson’s numbers are in line with McGraw Hill Construction’s 2014 Dodge Construction Outlook, which forecasts a 9% boost in construction starts this year.

Simonson also said in the briefing that 2014 construction employment would increase between 250,000 to 300,000. By comparison, the industry had about 120,000 more workers employed at the end of 2013 than during the same period in the previous year.

Among industry segments, firms are particularly optimistic about private-sector work, according to the AGC survey. In five private-sector segments, 40% or more of those surveyed say those areas will increase and fewer than 20% foresee declines.

In public-sector construction, a larger proportion of firms see a brighter outlook for water and sewer projects than for highway work.

On the other hand, contractors also say labor is tightening. The AGC survey shows that 62% of firms that responded say they are having a hard time finding professional and craft workers to fill job openings.

Higher costs present another worry, with 81% of survey respondents saying they expect health insurance costs to go up this year. Last year, 81% of the firms experienced increases in that area.

Materials’ costs also will climb, 90% of the contractors forecast, but 45% of those responding also note that they think the hikes  will be only between 1% and 5%.

In addition, 73% of responding companies say they intend to buy construction equipment this year, and 86% plan to lease. But the amounts spent will be modest, with 44% of firms saying they will purchase $250,000 or less in total new equipment in 2014.

More than 800 construction firms responded to the survey, which AGC conducted in December 2013 and the first week of January.