Construction contractors expect increasing demand for numerous types of projects in 2022 despite ongoing supply chain and labor challenges, as most firms plan to add workers this year, according to survey results released today by the Associated General Contractors of America and Sage. The findings are detailed in Expecting Growth While Coping with the Lingering Impacts of the Pandemic: The 2022 Construction Hiring & Business Outlook.

The percentage of respondents who expect a market segment to expand exceeds the percentage who expect it to contract – known as the net reading – in 15 of the 17 categories of projects included in the survey. Contractors are most optimistic about the market for highway and bridge construction, which has a net reading of positive 57 percent. They are similarly optimistic about transit, rail, and airports projects, with a net reading of 51 percent, and water and sewer projects, with a net reading of 50 percent.

These segments all stand to see increased federal investments because of the recently passed Bipartisan Infrastructure bill. Contractors are also upbeat about demand for federal construction projects, with a net reading of 37 percent, and power construction, with a net reading of 29 percent.

The highest expectations among predominantly private-sector categories, with a net reading of 41 percent each, are for warehouses and other healthcare facilities, which includes clinics, testing facilities and medical labs. The outlook for hospital construction is also strong, with a net reading of 38 percent.

Contractors were also optimistic about multifamily residential construction, with a net reading of 32 percent, and manufacturing construction, with a net reading of 27 percent. Expectations were more subdued, however, for public buildings, with a net reading of 20 percent; kindergarten through 12^th grade school construction, with a net reading of 19 percent; higher education facilities, with a 16 percent net reading; and lodging, with a 6 percent net reading. Only two categories received negative net readings, both of -8 percent: retail and private office construction.

Optimism about the growing demand for many types of construction projects is leading many firms to plan to hire workers this year. Seventy-four percent of respondents expect their firms will expand headcount in 2022, compared to just 9 percent who expect a decrease. Forty-seven percent of firms expect to increase their headcount by 10 percent or less. However, 22 percent say their headcount will grow by 11 to 25 percent and 5 percent anticipate an increase of more than 25 percent.

Adding those workers will be a challenge, however. An overwhelming 83 percent report they are having a hard time filling some or all salaried or hourly craft positions, compared to only 8 percent who say they are having no difficulty. And three-fourths of respondents say it will continue to be hard to hire or will become harder to hire this year.

The pandemic continues to impact the construction industry, association officials noted. Eighty-four percent of respondents report costs have been higher than anticipated, while 72 percent say projects have taken longer than anticipated because of the pandemic. As a result, 69 percent have put higher prices into bids or contracts, while 44 percent have specified longer completion times.

Supply chain bottlenecks are also impacting construction. Only 10 percent of firms report they have not had any significant supply chain problems. Sixty-one percent have turned to alternative suppliers for materials and 48 percent have specified alternative materials or products.

Rising construction costs and slowing schedules have contributed to a significant number of project delays and cancellations. Forty-six percent of contractors report having a project delayed in 2021 but rescheduled, while 32 percent had a project postponed or canceled that has not been rescheduled.

The full article is available here.

Craig DiLouie authored an LCA article summarizing major 2021 economic indicators and forecasting “Promising” nonresidential construction, looking forward. In 2021, the U.S. rebounded from 2020’s short but devastating pandemic recession with the strongest economic growth in nearly forty years. In 2021, the nation’s gross domestic product (GDP) grew 5.7%, ending the year with a quarterly expansion of 6.9%, according to the Commerce Department. During 2021, current-dollar GDP increased 10%, or $2.1 trillion, to a level of nearly $23 trillion, compared to a decrease of 2.2%, or about $480 billion, in 2020.

A major contributor to the economy is construction, which overall similarly rebounded with 9.3% growth in 2021. The rebound was uneven, however, driven primarily by residential construction spending.

The outlook for 2022 is even more positive, particularly for nonresidential, with significant and more balanced growth expected across this sector. If current trends continue, this positive outlook looks to accelerate in 2023. According to the AIA Construction Consensus Forecast Panel of leading economic forecasters, nonresidential building construction spending is expected to expand 5.4% in 2022 and strengthen to a 6.1% expansion in 2023.

Significant and well-known risks remain, however, notably supply chain disruption, inflation, labor challenges, and the lingering pandemic. As a result, the economy is expected to slow this year. The International Monetary Fund has forecasted U.S. GDP growth will slow to 4% in 2022. These risks also extend to the construction industry, producing higher costs and project delays.

The full article is available here.