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
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)
Isolating on construction jobs, growth is strong and is about 300 thousand above pre-pandemic levels.
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
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
Zooming in, we see total non-residential surging up over the last two quarters.
US Construction Volume – Non-Residential Spending
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
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
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.
