WATCH: 2022 Q3 Construction Economic Update and Forecast
Construction Executive presented its "2022 Q3 Construction Economic Update and Forecast" webinar with Associated Builders and Contractors Chief Economist Anirban Basu on Oct. 12.
Starting the presentation with an update on U.S. construction job openings, Basu shared the most recent data showing a rise in openings, with about 407,000 active job openings, nearly double the average from 2015 to 2020. He noted that over the last year, ending in September, there’s been a 5.5% increase in construction wages—the fastest rate in nearly 40 years.
While construction has added 95,000 employees over pre-pandemic levels, Basu said those gains are a drop in the bucket, made up largely of unskilled laborers and almost entirely in residential construction, while skilled labor continues to slide due to retirement.
Basu speculated that in the near future, contractors may have more difficulty passing along costs to project owners, but companies—especially performing commercial construction—expect more sales, expanding profit margins and extending backlogs, as well as continued high demand for workers.
Basu wrapped up his presentation suggesting that while events this year have often not played out as contractors may have hoped, it still has been a year of growth and the next few months remain hopeful for many. That said, a recession looms as the Federal Reserve considers drastic measures to curb inflation. Basu also noted that his forecast has not changed since the Russian invasion of Ukraine in February and continued to partially blame the conflict for lingering supply-chain delays.
In the Q&A session following his presentation, Basu covered some of the topics most concerning webinar attendees. He confirmed he does not believe we are in a recession currently, noting that when 263,000 jobs were just added in September, unemployment remains at 3.5% and hourly earnings grow at “5% or better,” it’s hardly indicative of a recession but rather a growing economy.
But, Basu warned, the writing is on the wall for a recession in 2023 “before the Federal Reserve finishes tightening monetary policy.” He does not expect it to be “an especially mild recession” and anticipates that inflation will remain “stubbornly high”—partly due to lingering supply-chain issues but mostly because workers have become more expensive and remain in short supply.
Basu predicted a .75% rate increase from the Federal Reserve next month, followed by a .5% increase in December.
The full recording and slides from this presentation can be accessed here.
Sign up for Construction Executive's "2023 Construction Economic Update and Forecast" presented by Anirban Basu, on Dec. 14, 202.
The webinar included live polls from the audience, with questions on profit margins, the status backlogs and the leading challenges firms face. The result from these polls are below, compared with polls from previous forecast webinars.