With all that the construction industry has been through over the past 12 months, it’s encouraging to hear that 2022 should be trending toward a return to normal.
In the Dodge Construction Industry Outlook 2022 webcast on Nov. 3, Richard Branch, chief economist for the Dodge Construction Network and Cris deRitis, chief economist, Moody’s Analytics, said they expect price increases for construction products and supply chain issues to gradually taper off by the end of 2022, and they are both projecting growth in construction next year. Branch sees total construction starts increasing +6% in 2022 to $946 billion. He says a large chunk of that growth will come from the still-strong single-family construction market, which Dodge is forecasting to log more than 1 million starts in 2021 for the first time since 2006.
Branch expects commercial building starts, which include stores, offices, warehouses, hotels and parking facilities to increase +12% to $143 billion, after a +15% increase in 2021 and last year’s -20% plunge.
He said the biggest challenges in 2022 for contractors will continue to be rising prices of materials, finding enough workers and figuring out how to be more productive with a smaller available workforce, people and productivity.
DeRitis agreed that inflationary pressures on material costs will continue to challenge the construction market and said the issue is related to a surge in demand for products and services of all sorts after the economy bottomed out last March. He said the current supply chain issues can be likened to “too many people trying to get through the door at the same time” as the economy ramps up. Branch and deRitis both expect 2022 growth in U.S. GDP of roughly +4%.
The full Dodge 2022 Construction Forecast is not yet publicly available, but EM wanted to publish some of the top-line growth numbers released in the Nov. 3 webinar as soon as possible to help readers in their market planning.