Dodge Anticipates Positive Market for Construction in 2023
Hamilton, NJ, Dec. 14, 2022-Dodge Construction Network’s year-end report-which analyzes the key trends and insights across the industry throughout 2022, as well as insight into 2023-found that even though facets of a recession are possible, due to legislation and the advancements of project backlogs, construction may remain profitable through 2023.
While 2022 continued to show the same challenges as years prior, there was still strength that continued through the end of Q4. Manufacturing, life sciences, data centers, healthcare, infrastructure and multifamily emerged as outperformers in 2022. As the U.S. continues to “onshore” much of its manufacturing and warehousing to combat supply chain bottlenecks, Dodge anticipates that this will continue to trend upward through 2023.
Construction of emerging segments have a strong near-term economic outlook and data reflects that the construction of data centers is a clear growth driver. Comparatively, single family, office, and K-12 construction were stragglers.
“We still are seeing the fallout of the pandemic, even years later. Many experts believed early on that we would learn to live with COVID,” said Richard Branch, chief economist for Dodge Construction Network. “With that in mind, many industries are still learning how to adjust, most notably offices and schools. Due to the rise of remote work and education, new builds to support these sectors have lowered in demand. However, throughout the year, we still have seen largely positive numbers in construction in general thanks to promise in other sectors.”
The rise in sustainable construction and the rapid adoption of innovative technologies to drive efficiency remain leading trends heading into 2023. With the passage of the Inflation Reduction Act, sustainable and resilient construction is having a strong period, which should continue in the new year. This legislation, in conjunction with the Infrastructure Investment and Jobs Act (IIJA) and the CHIPS and Science Act, is a leading factor for construction’s generally positive outlook in 2023.
As economic growth slows, U.S. construction starts may remain relatively unchanged in 2023. As many industries brace for an economic downturn heading into the new year, the construction industry is tasked with managing increased lead times and increasing costs from material prices to labor, while also supplying the built environment its crucial needs.