In today’s construction news, learn that sales are high because building, especially infrastructure, has received a lot of federal financing and is forecast to stay busy through 2026. On the other hand, beginning at 7 p.m. on Monday, the U.S. 63 and Missouri 94 flyover bridges over U.S. 54 will undergo rehabilitation. The construction has caused some concern for nearby local businesses.
The unexpected Turns of The Market
Original Source: US construction: A market that defies expectations
US construction equipment sales broke records in 2023 despite expectations. The country may surprise again in 2024. Mitchell Keller says
In the September/October 2023 issue of International Construction, North American equipment sales (of which the US accounts for over 90%) for 2022 were at a record high, anticipated to dip somewhat in 2023.
A few months later, experts’ predicted downturn never occurred. Instead, more than 330,000 building units were sold, an 8% rise from the year before and another regional sales record.
Sales are high because building, especially infrastructure, has received a lot of federal financing and is forecast to stay busy through 2026.
While analysts are skeptical the country can beat the equipment sales record three straight years, megaprojects are rising, requiring more complex machines than ever. The industry is primed for another robust year of construction revenues.
Labor shortages
The US construction industry’s 2023 success is remarkable because it gained while its counterparts fell.
“For example, equipment sales in Canada dropped around 5% in 2023, and the European market was down similarly,” says Off-Highway Research managing director Chris Sleight.
Sleight expects equipment sales to drop in 2024, although even a 10% drop would put them near a historic high. Any decline could also ease concerns about rental inventory ballooning.
For the first time in history, Off-Highway Research expects North American equipment sales to eclipse 300,000 units in three consecutive years.
“This should all help keep the construction equipment market at very good levels in 2024,” added Sleight. “The residential slowdown may lower unit sales for high-volume compact equipment.
However, the shift toward infrastructure and higher-scale non-residential building means fewer, larger equipment, which boosts sector value and seller margins.
ABC head economist Anirban Basu was surprised by 2023’s achievement.
He remarked, “I was far too pessimistic last year,” in a first-quarter industry forecast webcast. I assumed 2023 would be hard for the US, but it wasn’t in many ways.”
High consumer spending across the board helped the building industry avoid a long-awaited recession. Major federal spending from the Infrastructure Investment and Jobs Act (IIJA), Inflation Reduction Act (IRA), and Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act helped prevent a recession and fund construction projects.
However, headwinds existed. A skilled labor shortage plagued the business all year, sometimes worsening. That reality has limited 2024 optimism.
Some places had construction employment shortages, but others did not.
Over the past four years, Texas and Florida’s main metros saw the biggest construction job growth (6.5% to 10.7%). California had the biggest construction job drop, followed by Baltimore, Boston, and Portland.
I think the number one issue of most contractors, whether infrastructure or another, is finding enough labor to perform the projects, says AGC chief economist Ken Simonson.
“While not every state increased employment, more would have if there were enough workers.”
Megaprojects in manufacturing and infrastructure
Manufacturing and infrastructure megaprojects may help the US outperform predictions again.
Sleight showed sector growth by comparing 2017-2021 and post-2022 manufacturing-facility construction values.
“The CHIPS Act spurred manufacturing facility construction. U.S. Census Bureau data shows this market was worth $66–$78 billion in 2017–2021. It rose to $106 billion in 2022 and is expected to reach $150 to $180 billion in 2023, he said.
One of the nation’s major infrastructure initiatives was made possible by the IRA. The segment’s value rose 4% in 2022 ($374 billion), but it rose over $400 billion in 2023 due to highway and road construction.
ABC reports factory build investment increased 190% from February 2020 to January 2024. Basu anticipates industry activity to continue high for ‘years to come’ due to the number of unstarted projects. Basu cites US federal government-funded megaprojects for Intel in Ohio, Micron in New York, and Samsung in Texas.
ABC’s ‘Office’ subsector data centre stats do not show manufacturing construction’s rapid rise.
Basu writes that data center construction are driving the office subsector, which has grown 4.7% from 2020 to the present and has office vacancies above a 10-year high. According to Global Information, the US data center construction industry is $25 billion and predicted to reach $33 billion by 2029.
Simonson makes a similar observation for utility works at AGC. He continues, “Excuse the pun, [but] It does look as if the money for water and sewer projects started flowing.”
Simonson notes that roadways and bridges, which receive more investment, have higher regulations. Steel imports are strictly restricted.
“I think that’s really delayed the disbursement of the money and the actual work on projects much longer than most people expected,” Simonson says, noting that a “Buy American” initiative has added steps to a waiver process for imported materials.
He says, “The Biden administration has really tightened up on those waivers and took them a long time even to say what the process would be.” “In general, this will delay or increase the cost of the entire project, not just the material.”
Grading US infrastructure
Every four years, the American Society of Civil Engineers (ASCE) grades the nation’s infrastructure in 17 categories (bridges, roads, utilities, etc.).
The organization will provide a report card following its 2021 update next year. The US got a slightly below average “C-” that year, with transit (D-), dams (D), and stormwater infrastructure (D) rating lowest. Rail (B) and ports (B-) scored highest.
“We use eight different criteria to identify those grades,” says ASCE Committee on America’s Infrastructure chair Kristina Swallow.
Swallow said the committee is adding an essential question to its scoring criteria for next year: Is the country funding enough to build the infrastructure it needs?
While it’s too early to predict grades, she highlighted significant change in the infrastructure building area since the last report card.
“The IIJA has significantly increased the federal share of infrastructure investment,” she says.
It’s raised hopes that the US could improve from its C-, and ACSE’s Bridging the Gap economic analysis suggests higher expectations. In contrast, their 2021 economic report was Failure to Act.
Swallow believes infrastructure spending will have beneficial ripple effects, but for how long? Major infrastructure projects are funded to 2026, leaving questions about what happens then.
“The analysis spans 20 years (2024–2043) and includes two scenarios,” the research says. The ‘Continuing to Act’ scenario implies that this increased infrastructure investment level will be the baseline for future funding. Another scenario, named ‘Snapback’, predicts infrastructure spending returns to pre-2022 levels after 2026.
Swallow feels the immediate and short-term consequences have been positive, and she thinks improving infrastructure countrywide is a non-partisan subject, even if it’s an election year.
“There’s a lot of polling data that shows both sides [Democrats and Republicans] really understand how critical infrastructure funding is,” she says. “We are fortunate that the stars and planets aligned to pass this IIJA bill, and we are now reaping the benefits. We must keep investing in our infrastructure.
Will a recession slow US construction?
Infrastructure and building have not necessarily increased worker availability: the skilled labor shortage remains a major obstacle to the US market.
Between 2019 and 2020, the US construction industry unemployment rate was around 3%, according to BLS data. February 2024 saw that level surpass 5%, a 10-year high.
A labor shortage, increased consumer credit card debt, and high interest rates might hinder construction expansion in a sturdy region. Even with finance and projects, the restrictive labor market could create days and lost revenues.
ABC’s Basu reports that there were 413,000 construction openings at the start of the year, up from 300,000 pre-pandemic. Contractors were already grumbling about a lack of trained labor.
Sleight thinks 2024 won’t be as surprising as 2023. He argues, “It is unlikely that such steep rates of growth will continue.” Construction backlogs are finally falling, and confidence indicators and forecasts are indicating small work and staffing increases.”
However, US construction activity is high and higher than other nations. Sleight predicted North American building activity will remain at record highs even if the market cools. “A positive is that materials and labor cost inflation should moderate.”
Traffic Impacts of U.S. 54 Construction Unknown for Jefferson City Businesses
Original Source: Jefferson City businesses unsure how U.S. 54 construction will affect traffic
Some nearby businesses are worried about the 7 p.m. Monday start of rehabilitation work on the U.S. 63 and Missouri 94 flyover bridges over U.S. 54.
Crews will narrow Jefferson City’s U.S. 54 overpass from south of the Missouri River Bridge to Missouri Boulevard to one lane each way.
Some traffic will be redirected around construction to protect drivers and workers while the bridges are open.
The first phase of the project will limit work zone speed to 35 mph. U.S. 54 eastbound lanes will be 10 feet wide and westbound 15 feet.
Brandi Pressley is the lead waiter at The Landing Zone, a Jefferson City Airport restaurant near the junction where development will begin.
“I definitely think it will affect us quite a bit because the last time they shut the bridge down it was just horrible,” he remarked. “Very slow. I suppose it’s because most of our customers are older and want to eat breakfast without waiting two hours in traffic.”
Mike Moscato owns River City Florist, a downtown delivery florist.
“A little bit remains to be seen of how backed up it’s going to be,” he said. We may make fewer bridge trips per day. We currently go as often as needed, but if it’s really backed up, we may cut it to once a day, except for funerals where we must get there at a set time.”
This is one of numerous Jefferson City U.S. 54 corridor projects to improve safety, reduce congestion, and extend road and bridge life.
“Play it by ear,” Moscato remarked. “What, 15-20 minutes more? No idea. Anything more and we’ll have to change on the fly and see what happens.”
Pressley said construction may delay employees’ commutes.
“We are all still going to be here working hard, so I hope everyone comes out and can just bear with us through all of this because we definitely still want our customers to come see us,” he said.
The project should finish mid-September.
Summary of today’s construction news
In simple terms, the US has unquestionably more construction activity than any other nation. Sleight predicted that “the amount of construction activity in North America will remain at historically high levels, even with a cooling in the market.” One benefit of this is that labor costs and material price increases should slow.
On the other hand, this is only one of many initiatives planned to improve traffic flow, increase safety, and extend the lifespan of the roadways and bridges in Jefferson City’s U.S. 54 corridor.
