Slowdown or Growth, What's Facing the U.S. Construction Industry.
The construction industry remains at a crossroads, said Ken Simonson, chief economist at United General Contractors. Economic relief is here to stay, Simonsen said in a recent webinar titled "U.S. Construction Industry Outlook." However, the mid-to-long-term outlook for the construction industry points to a slowdown in project development and increased difficulty in recruiting workers.
Data for the glass and glazing industry was more optimistic. KMR’s latest 2023 Glass and Glazing Industry Outlook report shows that the value of non-residential glass and glazing activity in 2022 is close to $22 billion and is expected to surpass this level in 2023.
The report also states that glass manufacturers/producers and glass system suppliers expect higher sales in 2023 than in 2022.
Figure 1 The U.S.A construction industry remains at a crossroads
Mid-term Construction Outlook
Glazing contractors are optimistic about growth in the institutional sector, including education, public, and healthcare buildings, according to KMR's 2023 Glass and Glazing Industry Outlook report. Simonson reports that multifamily housing, warehouses, retail, offices, universities, and lodging are all at risk from a slowing economy and rising interest rates. Several pieces of legislation passed recently should boost infrastructure and manufacturing, but the translation of funds into building incentives and spending will be slow, he added. Economic activity will continue and recession risks are expected to remain. People are groping and moving ... On the positive side, data center projects are still strong as well as manufacturing and power construction projects.
Glazing contractors are optimistic about growth in the institutional sector, including education, public, and healthcare buildings, according to the KMR report.
Long-term Construction Outlook
Simonson said the labor shortage trend was likely to continue in the long term. He expects the problem to persist far beyond rising material costs and supply chain issues. It has become difficult for construction firms to compete at a time when other industries are offering flexible working conditions.
Other long-term concerns center on slowing demand growth for most buildings as population growth slows. This could affect residential construction and education, including K-12 and higher education construction. Simonson added that there are concerns over whether the office sector will continue to be fragmented and it is unclear whether urban/rural or state-to-state migration will continue or reverse.
Building Construction Forecast Alex Carrick, the chief economist at ConstructConnect, a provider of software solutions for the pre-construction industry, reports that construction will ramp up from 2024 onwards. His firm's data shows instability in 2023, followed by steady growth from 2024 to a peak in 2025.
Carrick said the growth would be an increase in residential project starts, which are expected to increase by 29.2 percent by 2025. He noted that despite expected growth, combined residential, industrial, and nonresidential construction starts are expected to decline in 2023.
Overall, total construction starts are expected to decline by 4.8% in 2023 and gradually increase by 2025 before slowing down again.
"We expect growth to be about 5 percent lower this year, largely due to rising interest rates and a pullback in the housing market," Carrick said.
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