Construction Economic News

Total U.S. construction labor supply has grown by 5% since the end of 2019. Despite this growth, the supply of willing laborers is well below the level demanded. Based on data released in the fourth quarter of 2022, there remain nearly 400,000 unfilled construction industry positions. This severe shortage has worsened over the last two years despite some of the largest annual pay increases—but also wage-eroding inflation—for construction workers in decades. The overall labor challenge (shortage) facing construction is not expected to significantly change at the broadest level. However, there are several important intra-industry trends that will force industry leaders to take very different labor strategy tactics in the coming one to two years.

November’s inflation data reported on December 13, 2022, came in below expectations. The basket of goods and services, which are used to broadly track prices, rose 7.1% in the year period ending November. This latest year-on-year rate change is the lowest since prices first began their rapid ascent in early 2021. Furthermore, it marks the fifth consecutive decline in annualized inflation rate readings since June 2022’s decades-high reading of 9.06%.

Only in recent months has a consensus developed that the global economy is likely to contract in 2023. In the Wall Street Journal’s latest survey of 65 highly recognized economists conducted during October, the average nominal U.S. GDP outlook on a seasonally adjusted annualized basis was for declining GDP rates in both the first and second quarters of 2023 before returning to less than 1% growth in the third quarter.

As the United States added 263,000 jobs in November, Canada stood by and watched in awe. The change in total employment north of the border in the latest month, according to Statistics Canada, was only +10,000 jobs.

A Change Has Come Over Stock Markets Earlier this year, a terrible gloom descended on stock markets both at home and internationally. Fears of what rising interest rates would do to economies near and far sent investors hurrying to divest their holdings. The exiting was especially brutal from March through September.

As the war in Ukraine quickly approaches the one-year mark, discussions of how the world will coordinate a long-term strategy that economically targets Russia while minimizing the collateral damage done to other economies have only grown.

Some of the factors that have been driving rapid price inflation are relenting. The higher interest rates have pricked the balloon of excess consumer demand. Commodity price changes that were once hot have now cooled. Many of the blockages in supply chains have been relieved through workarounds and by hiring more freight haulers and other logistical staff.

Once again, there was little wrong with the U.S. labor market picture in the just-released monthly update from the Bureau of Labor Statistics. November’s jobs creation figure was +263,000, not far off what it’s been in each of the three preceding months.

The current year, 2022, is shaping up to be the best ever for megaproject initiations. Megas are projects carrying an estimated construction value of $1 billion dollars or more each. For many of these projects, there’s also a machinery and equipment component in the total capital spending or investment figure that is often roughly equivalent to the construction cost.

Wages in the construction and manufacturing sectors continued to push higher early in the fourth quarter of 2022. The average hourly compensation for all employees in the construction sector ended October 2022 at $35.27, an increase of 13.2% from the end of 2019. Similarly, manufacturing wages have increased from $28.16 at the end of 2019 to $31.23 in October, notching a smaller gain of 10.9%.