Although we’ve heard a lot about the recession recently, economists at Associated General Contractors and Associated Builders and Contractors believe that TThe US economy will be able to avoid recession in 2023. According to Dodge Data and Analytics chief economist Richard Branch, there will be some sectors that will feel the recession while others will not. Contractors who are able to target sectors experiencing growth will benefit from this mix economic forecast for 2023.
Ken Simonson, an economist at AGC, also noted that continuously growing employment opportunities, state funding and declining inflation are positive signs that the construction industry will not face a recession. Contractors are also confident that most of them are looking to hire more employees in the next six months. Surveys indicate that five out of 10 contractors expect their sales to increase, while only two out of 10 contractors expect their sales to decrease.
Down markets
There are some markets that are experiencing certain challenges right now. These markets include residential construction, office construction, warehouse construction, retail construction and manufacturing construction. There are a few different reasons these markets are suffering right now. Simonson noted that residential construction is facing a serious problem due to declining housing starts, building permits and home sales. Dodge professionals predict that the single-family housing market will bottom out by the end of the first or second quarter of 2023.
Warehouse construction accounts for 16% of the market, but earlier this year Amazon announced that to adjust to reduced demand it was halting or delaying construction of warehouse facilities. While it was once the strongest segment in commercial construction, Dodge reports that it is now overbuilt and projected to decline in 2023. The growth of online shopping also continues to weigh on demand for brick-and-mortar retail, and is nowhere near where it once was.
The markets up
Some sectors are experiencing growth despite ongoing talk of recession. These markets include public works construction, electricity and utilities, and data center construction. Dodge experts predict that public works construction will increase by about 18% by 2023 and the market will reach $225 billion. With the Employment and Infrastructure Investments Act in play, the construction of public works will experience growth like never before. With the investment of 1.2 trillion dollars in infrastructure development projects sale of construction machinery will also see an increase.
Dodge also predicts 8% growth in the power and utilities sector with the conversion of power and utilities to renewable sources by 2023. Globally, the emphasis is now on green building and people is making efforts to restructure existing fuel markets with alternative and renewable energies. . According to Dodge’s forecast, data center construction will continue to be in demand through 2023. With the rise of online shopping and employees working from home in recent years, this sector has been a bright spot for the construction industry of late.
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