Electrical Distributors Looking at +9.7% Increase in 2022 Sales in EW Survey

Electrical distributors are bullish about 2022. The 200-plus respondents to Electrical Wholesaling’s survey for the 2022 Market Planning Guide are on average looking for a +10% increase in their 2021 sales and a +9.7% increase in sales for 2022. That upbeat outlook is enough to drive total industry sales through electrical distributors to $143.2 billion.

Two well-known construction forecasters were optimistic about next year's growth prospects for this key market segment. Richard Branch, the chief economist for Dodge Data & Analytics, said in the recent 2022 Dodge Construction Outlook that he expects total construction to increase +6% in 2022 to $946 billion, after a +12% increase in 2021.

Branch said although the construction market should enjoy steady growth next year, prices, materials shortages and worker shortages will still be big issues. He sees the largest increases in spending on construction starts in the following areas:

• Commercial: +12% to $143 billion

• Warehouses: +13% to $52.8 billion

• Offices: +10% to $49.7 billion

• Retail: +14% to $15.5 billion

• Hotels: +24% to 8.8 billion

Branch said in a recent press statement that although U.S. economic growth has resumed after a slowdown in 3Q 2021 because of the resurgence of the Delta variant, the construction sector’s grip on growth remains tenuous.

“Long term, construction starts should improve, fed by an increase of nonresidential building projects in the planning pipeline and the recent passage of the infrastructure bill,” he said in the release. “Both will provide meaningful support and growth to construction in the year to come. This expectation, however, must be tempered by the significant challenges facing the industry — high prices, shortages of key materials, and the continued scarcity of skilled labor. While healing from the pandemic continues, there’s still a long road back to full recovery.”

Kermit Baker, chief economist for the American Institute of Architects (AIA), said in a post at www.aia.org that architects are seeing more demand for retrofit work. “Even prior to the pandemic, architects were reporting that almost half of their billings resulted from renovations, rehabilitations, retrofits, additions and historic preservation projects on the existing building stock.

“After declining about -2% last year, the AIA Consensus Construction Forecast Panel in its mid-year update is projecting that spending on nonresidential buildings will decline an additional -3.9% in 2021 — an upgrade from the -5.7% decline forecast at the beginning of the year — and that 2022 will see a +4.6% increase in spending.

“The strongest performers this year are expected to be health care facilities (+1.4%), and a few others that should see only modest declines: retail (-1.3%); religious (-0.9%); and education (-2.1%). However, in 2022 virtually all the nonresidential building sectors are expected to see healthy growth, paced by lodging, as well as amusement and recreation, both of which saw steep declines during the pandemic.”

The construction of large hospitals valued at $1 billion or more and data centers in the $400-million to $500 million range look most likely to lead all project types in 2022, according to EM research.

— Jim Lucy