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May 4, 2023
New Q1 2023 Construction Metrics Index
So Far, 2023 Looks a Lot Like 2022...
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So far, 2023 is feeling a lot like 2022, at least when it comes to construction industry stats. That’s according to Trimble Viewpoint’s latest Q1 2023 Construction Metrics Index, which shows striking similarities to the stats from the previous metrics index.
The most pronounced statistic is that new projects and contract values decreased by 40% in both the second half of 2022 and in the first quarter of 2023. On the bright side, a substantial portion of the rate decrease came in January 2023; projects increased 23% in February and March of 2023, potentially indicating that there might be light at the end of the tunnel.
Contract values showed similar declines, decreasing 45% in Q3 and Q4 and 25% in Q1 of 2023. While this isn’t too surprising given the decrease in overall projects, lower contract values impact contractors' bottom lines as fewer projects means more competitive bidding, which can translate to lower profits.
As has been the case for many years now, hiring showed modest gains – both in Q3 and Q4 of 2022 and Q1 of 2023. Hiring remains a brighter spot for the industry, although many contractors are still challenged to find skilled labor in an increasingly competitive economy.
The main statistical outlier was cash flow. Last year, many contractors had decreased cash flow, which meant they were spending cash on projects, workforces or maybe even technology upgrades. In Q1 of 2023, cash flow increased by 13.5%, which shows that contractors are holding onto cash, likely due to the decrease in projects, cash flow and their overall confidence in the economy.
Heavy Highway and Civil Contractors Remain Most Negatively Impacted
Of all the verticals, it’s clear that heavy highway and civil contractors felt the most unnerved about the economy as they had the largest decrease in projects – 53%, the largest decrease in contract values – 55% and the largest increase in cash flow – 85%.
This follows a similar trend that started in 2022, which is perhaps attributed to the slower-than-expected pace of federal infrastructure funding from the U.S. Bipartisan Infrastructure Law.
However, general contractors also saw fairly substantial declines, as new projects decreased 39% and contract values decreased 61%. But instead of holding onto cash, they decreased their cash flow by 13.4% in Q1.
Specialty Contractors Showed Most Stability
Speciality contractors also felt the slowdowns, but their declines were not nearly as dramatic. In Q1, new projects decreased 14% and contract values declined 28%. They also decreased their cash flow by 50%, indicating that they’re spending money on projects and other capital investments.
Many specialty contractors generate a lot of their revenue from service contracts, which are constantly needed in order to maintain assets so that could explain why they demonstrated more stability in Q1. However, it’s clear that the overall project slowdown impacted too, as demonstrated by their less-than-stellar stats.
To see the full report and determine how your organization compares, follow the link above, and stay tuned for more important construction news.
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