3 major construction market trends in 2023
What’s in store for the construction industry over the next year
Inflation rates will determine the health of the construction industry next year, as well as the U.S. economy as a whole.
As projected in the new year, if interest rates stop increasing and core inflation continues to improve, the U.S. economy will begin to stabilize within the next year, which is a promising outlook for the construction industry as a whole.
In 2022 construction projects increased by nearly 20% and are expected to remain steady in the next year, which is an improvement from the fluctuation after the COVID-19 pandemic.
This is not to say the construction industry is without challenges over the next 12 months. According to Equipment World’s 2023 Industry Outlook, here are the key takeaways to prepare for the year ahead.
- Labor shortages
Skilled labor availability continues to be one of the largest challenges facing the industry, which will, unfortunately, carry over into 2023. Though 2022 saw improvement, the workforce as a whole is still experiencing a record-breaking number of position openings.
To counteract this phenomenon, companies are warned not to conduct major layoffs in 2023, as the rehiring process will be daunting and more costly than keeping existing employees.
- Material costs to decrease
On a positive note, the heavily inflated cost of construction materials that we came to know in 2022 is projected to improve.
Inflation peaked in late 2021 and the industry is still recovering, though you can rest easy knowing these costs are expected to take a much-needed downturn.
Unfortunately, it is still unknown how different material costs will be impacted, as demand and supply chain issues are clear aggravators of cost and availability for construction companies.
- Construction input costs continue to rise
Inflation, high wages, and inflated material costs have severely impacted contractors’ bottom lines within the past year, meaning construction input costs versus billed project costs have become increasingly similar. This is a cause of concern for many contractors as the cost to complete projects draws eerily close to the amount of money made on each project.
As construction input costs are projected to increase throughout the next 12 months, bid prices will as well, causing consumers to pay more for services to balance inflated costs on the contractors’ side.
As the construction industry continues to repair itself from the economic damage of the pandemic, 2023 is sure to bring a positive change to the construction industry. Please visit compassgrp.com for more information on how you can partner with us in developing your next construction project.
Topics: construction industry