SOSDY: Same old situation; different year. And maybe that’s a good thing because we don’t want nor need another 2020.
Construction starts should be similar to 2022. Dodge Data & Analytics Chief Economist Richard Branch says it may feel like a recession for parts of the construction industry, but nothing like the Great Recession (December 2007-June 2009).
We may avoid a severe recession because the labor and housing shortage will continue in 2023 but our banking system is solid. The lack of workers and rising interest rates could curtail just how many projects construction industry businesses can manage.
Construction industry labor shortages will continue impacting contractors and clients. Increased federal spending in 2023 will escalate the demand for construction workers. But that same initiative could persuade talent that the construction industry is a steady and long-term career commitment and not short-term employment.
High materials costs will continue to be an issue facing the construction industry. “Inflation has plagued the industry and COVID-19 has continued to impact supply chains, causing materials prices to swing wildly,” says Construction Dive editor Julie Strupp. “While lumber and plywood prices were a huge concern at the beginning of the year, that has since eased…cement and diesel costs are now giving contractors grief.”
Ken Simonson, Associated General Contractors of America Chief Economist said, “Cement and concrete products are likely to have continuing shortages as the nation has not added any cement production since 2009.”
Construction industry material price volatility predictions for 2023 are:
|Aluminum mill shapes||Low|
|Copper/brass mill shapes||High|
|Steel mill products||Moderate|
Multifamily development may show signs of decline, but it will continue to be a “robust market,” said Branch. In 2022, multifamily construction was at an almost 40-year high and should continue to be strong. Single-family units continue to be expensive and lack availability.
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