A new report from Dodge Data & Analytics shows some positive trends in terms of the near-term construction industry forecast.
According to data released last month, total construction starts rose 3% in April to a seasonally adjusted annual rate of $945.8 billion. Nonresidential building starts rose 6% and residential starts increased by 4%, while nonbuilding starts fell 4%. Year-to-date, total construction was 6% higher in the first four months of 2022 compared to the same period of 2021.
Nonresidential building starts rose 19%, residential starts gained 3%, while nonbuilding starts were 2% lower. For the 12 months ending April 2022, total construction starts were 12% above the 12 months ending April 2021. Nonresidential starts were 24% higher, residential starts gained 11% and nonbuilding starts were down 1%.
“The construction sector is seemingly shrugging off the fear of higher interest rates and a potential recession,” said Richard Branch, chief economist for Dodge Construction Network. “Many building sectors have made the turn from weakness to recovery as underlying economic growth and hiring are solid. With the pipeline of projects in planning continuing to expand, this trend should continue in the months to come. However, the concern that the Federal Reserve will force the U.S. into recession later this year may thwart the momentum in construction starts. While recession is not our baseline forecast, it can not be fully discounted.”
This report indicates that healthy growth in building construction offset infrastructure weakness, and that contractors are eager to get started on larger, more profitable projects. It's not too late to modernize your construction operations (including moving to a cloud-based construction management platform) or implement a staff augmentation strategy to bridge the gap and address your project pipeline while you recruit qualified full-time workers.