Construction Industry Trends: August 2022 Roundup

Two new bills, signed into law by the White House in August, promise another boost for construction industry projects.

The Inflation Reduction Act of 2022, a $485 billion bill aimed at combating climate change and thwarting recent inflation trends, includes $3 billion in funding to improve arterial roadways and make them safer for different modes of transportation. The bill also contains $5 billion for programs to aid the construction industry’s shift toward low-embodied carbon building materials.

Meanwhile, the $52 billion CHIPS Act subsidizes the semiconductor industry and provides 25% tax credits to companies that build semiconductor facilities on United States soil. This is seen as a huge win for contractors as even more of these multi-billion-dollar projects are now expected to be announced or come online soon. Last month, we noted several semiconductor projects by companies like Samsung and SkyWater Technology announced for locations in Texas and Indiana. The CHIPS Act, said Dodge Data & Analytics chief economist Richard Branch, will “keep the construction sector on sure footing as the economy slows over the next year.”

The Takeaway: This is good news as these bills dedicate even more federal funding to noteworthy construction projects. Not only does this help secure more work for construction firms for the long-haul, these projects will go a long way to both improving our nation’s infrastructure and industry. Of course, challenges still remain, however. Among them, finding talented workers to build these projects amid the ongoing labor shortage, as well as supply chain and cost issues for construction materials. And, contractors looking to take on these federally funded jobs will need to have the latest construction operations, management and reporting technologies at their disposal to meet modern contract demands.

June numbers on construction hiring caused some concern, as open job opportunities dropped by 71,000. Yet, the dip appeared to be more of a blip, as July figures showed the industry added 32,000 net new jobs and that year-over-year construction industry employment increased more than 310,000, or 4.2%. This exceeded even surprisingly good national trends for all industries in July. Employers across the board added 528,000 jobs in July and unemployment fell to just 3.5%.

Construction starts also surged in July, according to Dodge Data & Analytics. Total construction starts were up 48%, driven by a 79% boost in nonresidential building projects. Year-over-year, construction starts were up 10%. “Mega-projects aside, construction continues to improve despite the pressure created by higher interest rates and labor scarcity,” said Dodge Data & Analytics’ Branch.

The Takeaway: This is great news to see! It seems like we’ve been talking about the impacts of a potential recession for almost a year now. So, is a recession imminent? Expert opinions are mixed. Are we already in a recession? Maybe, opinions there are also mixed. Will the construction industry be able to weather any downturn? Likely, experts say, though not without the potential for short-term pain. Nearly all agree, however, that contractors that have modernized their operations stand the best chances to both buffer against a recession and thrive after. 

Branch in the above report notes, “Combined with the strong labor market, this is another indicator that the U.S. is not currently in a recession. However, the Federal Reserve will continue to aggressively raise interest rates until they feel that inflation is under control. This will create mounting pressure on building activity and potentially lead to a slowdown in construction starts by year-end.”

Contractors might still be struggling to round out their workforces as the labor shortage continues, but a once overlooked demographic is now becoming recruiting central for new construction industry talent—women. An August Bloomberg report noted that women—who have traditionally made up less than 10% of the construction workforce—are filling more and more open construction jobs.

In May 2022, the number of women employed in construction topped 1 million for the first time ever, and in August, the percentage of women in construction jumped to an all-time high of 14.1%. Good pay, room for career advancement and other factors are attracting more female professionals to construction jobs. As more Baby Boomers retire from the workforce and younger generations move in, the “guys only” mentality of construction is changing.

“We cannot afford in this industry to turn down people purely based on gender,” said Patrice Haley, a member of construction giant DPR’s diversity leadership team in the report. “A lot of that veteran talent is starting to retire. We can’t leave any stone unturned.”

The Takeaway: This is outstanding and very welcome news! We’re seeing more and more women gravitating to construction jobs–not just in the back office, but the field as well. Of course, as the Bloomberg report notes, there is still a long way to go. The industry has still not completely shaken the boy’s club mentality, and women still face harassment, pay gaps, tense working environments and more. This is even more reason for construction companies to deploy strong diversity, equity and inclusion (DEI) programs to help shift these narratives and further advance safe working spaces and career opportunities for women

If there are concerns about economic stability in the months and years ahead, it’s certainly not slowing down plans for massive, multi-billion-dollar construction projects. Scores of massive projects with price tags of $1 billion-plus have already been unveiled this year, and August added to the mix. Here are just some of those announced or underway:

• A $2.3 billion GreenCity “eco district” development outside of Richmond, Va., which will feature office space, retail shops, over 2,000 housing units, two hotels, a 17,000-seat arena and extensive park space. The project is expected to break ground in early 2023
• A $1.56 billion replacement of the Portal North Bridge in Kearny N.J. that broke ground in August. The project will accelerate rail freight and commutes for NJ Transit and Amtrak riders, and represents NJ Transit’s largest-ever construction award
• Approval of plans for Dominion Energy Virginia’s $9.8B offshore wind farm, which will build 176 wind turbines some 27 miles off the coast of Virginia by state regulators in August
• Approval of a 52.4-mile leg of high-speed rail line connecting the cities of Bakersfield and Merced by the California High-Speed Rail Authority Board. The $85 million leg is part of a $113 billion overall high-speed rail project throughout the state
• A request for proposals (RFP) issued by Miami-Dade County to redevelop 17 acres of downtown Miami property, as part of a nearly $10 billion public-private partnership

The Takeaway: There is no shortage of significant projects up for grabs—and huge potential profits for construction firms! That said, much of this work is not just being handed out to any ol’ contractor. Most of these projects and countless others have significant demands attached to the construction contracts. From DEI, fair wage and sustainable building requirements to modern technologies, collaborative work environments and real-time reporting capabilities, it’s clear that the contractors winning this work will be the ones that are both data-driven and able to check all of the modern construction boxes. If contractors think they can get by with what’s just been good enough so far, they’ll wind up leaving a lot of money on the table. 

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