Sectoral Watch Q1 2023
Drilling down into significant sector movement and what lies ahead

Sectoral Watch Q1 2023 - focus on construction

 

Sectoral Watch Q1 2023 UA Work Outlook Map

 

Last quarter we had this slide from one of our guests showing future spending related to mechanical and electric contractors.

Bid prices in these trades have been very upward volatile recently and are contributing greatly to our continued recommendation of large bidding contingencies.

Three big numbers on this slide;

Electric Vehicle/Battery Plants contribute spending to the Manufacturing/Industrial sectors.

Energy Infrastructure contributes to Power in the Infrastructure sector.

Semi-Conductors contribute to the Manufacturing/Industrial sectors.

The remainder could be distributed across all construction sectors.

Judging by the amounts shown, this is projected spending over the next 5 to 7 years.

 

 

US Job Creation

Sectoral Watch Q1 2023 US Job Creation - Graph with Construction highlighted

 

 

Stepping back to total jobs and job creation in the overall economy, construction, manufacturing, transportation, utilities, education, and health sectors are all strong contributors to job growth from pre-pandemic to now, 2.2 million of the 3.3 million new jobs.

 

 

US Construction Employment (thousands)

Sectoral Watch Q1 2023 US Construction Employment Chart

 

 

Isolating on construction jobs, growth is strong and is about 300 thousand above pre-pandemic levels.

 

 

US Construction Volume

Sectoral Watch Q1 2023 US Construction Volume

 

 

Dollar volumes by sector are starting to show a shift as overall volume hits a plateau.

The drop in Residential construction offsets strength in the Infrastructure and Non-Residential sectors.

 

 

US Construction Volume – Sector Breakout

Sectoral Watch Q1 2023 US Construction Volume

 

 

When we pull the charts apart, we see how tight credit conditions and higher interest rates are backing residential volumes down.

Non-residential and Infrastructure volumes are surging, particularly in the last few months.

 

US Construction Volume – Total Non-Residential Spending

Sectoral Watch Q1 2023 US Construction Volume – Non-Residential Chart

 

 

Zooming in, we see total non-residential surging up over the last two quarters.

 

US Construction Volume – Non-Residential Spending

Sectoral Watch Q1 2023 US Construction Volume – Non-Residential Spending Chart with office, commercial, educational, health care, and manufacturing

 

 

Big upward movers recently within this sector are; office, commercial, educational, and manufacturing.

Manufacturing is particularly noteworthy. Volume has doubled since pre-pandemic.

Electric Vehicle/Battery Plants and Semi-Conductor Fab Plants, as shown on the first slide, are in this sector.

 

 

US Construction Volume – Non-Residential Spending

Sectoral Watch Q1 2023 US Construction Volume – Non-Residential Spending Chart with lodging, religious, public safety, amusement and recreation spending

 

 

Most of these minor sectors are static.

Lodging has come back slightly from pandemic lows.

 

 

Total Non-Residential and Infrastructure Spending Growth from Pandemic Lows

Sectoral Watch Q1 2023 US Construction Volume – Non-Residential and Infrastructure Totals - Growth since pandemic lows

 

 

Totaling Non-Residential and Infrastructure sectors shows growth of over 200 billion dollars in construction volume since pandemic lows. With respect to mechanical and electrical trades, the sectors above are heavy users, particularly if some sectors, like office construction, are largely renovation spending.

The anomaly here is the Power sector, which is static. The Power sector includes plants and distribution, both conventional and renewable. It also includes oil, gas, and nuclear.

Are raises in renewables getting offset by declines in conventional spending? Go to Industrial Revolution Redux  →

 

To watch the forum recording of this segment, visit: Design and Construction Market Outlook Forum May 24, 2023.

 

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Richard Vermeulen - Construction Economist for Green Building

Richard Vermeulen is the construction economist creating profitable sustainability in the built environment. He’s the founder of GreenLight™, author of Green at No Cost, and developer of the Total Benefit Analysis and The Value Process as well as co-CEO, lead economist, and chief estimator for Vermeulens. Richard has developed industry-leading standards for estimating and data-basing complex construction projects throughout North America. In addition to consulting for thousands of major projects over 30 years, Richard has designed and built residential and commercial projects, from hammering nails to hound-dogging bureaucracies. He has traveled extensively, always with an awareness of how cities do and don’t work.

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