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    Home » Trends » LGE Releases Q2 Construction Outlook Report 
    Trends

    LGE Releases Q2 Construction Outlook Report 

    BEX StaffBy BEX StaffMay 12, 2023No Comments3 Mins Read
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    By LGE Design Build 

    LGE Design Build has released its second quarter Construction Delivery Outlook Report that monitors and analyzes the economic uncertainty and changes within construction labor, supply chain, material pricing, inflation and overall demand. 

    Construction Labor 

    The construction labor shortages are not going to disappear anytime soon. Contractors continue to receive significant demand for mega-projects related to chip manufacturing plants and clean energy facilities while still struggling with a shortage of younger workers entering skilled trades. Other notable findings: 

    • On a national level, $1B is being invested in additional construction spending. The construction industry will need to attract 546,000 new workers in 2023 to keep up with demand. 
    • According to projections from the Arizona Office of Economic Opportunity, the construction employment sector in Arizona is expected to grow at an annual rate of 5.6% to 200,434 jobs by Q2 2023.  

    Supply Chain 

    Over the past six months, freight and supply chain issues have improved, but suppliers are now faced with the challenge of balancing softening demand while simultaneously dealing with the effects of past price increases and maintaining competitiveness. Other notable items: 

    • The major disrupters that supply chain leaders are still experiencing include transportation, production, raw material costs, geopolitical uncertainties and a lack of reliable transportation or shipping capacity. 
    • According to a survey by Coupa Software, 79% of supply chain leaders surveyed indicated their company plans to invest in agility and resiliency for their supply chain in 2023. 83% are already investing in digitizing their supply chain to reduce overall risk and avoid supply chain issues. 

    Material Costs 

    Unpredictability within the supply chain is impacting all aspects of the construction process, including raw materials and transportation. The ongoing war in Ukraine has also led to supply barriers and increased export prices for materials such as copper and aluminum. Other notable conclusions:  

    • Prices for lumber and structural/miscellaneous steel have generally trended downward in Q1 but they are not expected to return to pre-pandemic prices. 
    • The costs for electrical and roofing materials remain high and are not expected to change anytime soon, even after the industry experienced some small relief. 
    • Gypsum has risen in price for seven consecutive quarters but there are signs that it may stabilize in Q2. 

    Demand by Product Type 

    According to the Q1 2023 Construction Starts Forecast Report, there are significant variations in the year-over-year percentage changes for type of structure in square feet millions for each category of construction in the U.S. between 2022 and 2023. Other notable findings:  

    • For residential construction, there was a decrease in activity of 2.6% in 2022 and a projected further decrease of 1.1% in 2023, suggesting a slowing of growth or possibly a contraction in the residential construction market over the next year. 
    • The commercial construction market, including office space, also saw a decrease in activity in 2022 with a year-over-year decline of 3.8%. However, there is a predicted rebound in 2023, with an increase of 0.8%. 
    • The industrial construction market experienced an increase in activity in 2022 with a year-over-year growth of 84.8%. However, this is followed by a significant projected decline of 28.9% in 2023. 

    To view the full Construction Delivery Outlook report, click here. 

    Arizona Office of Economic opportunity Construction Delivery Outlook Report Coupa Software labor outlook LGE LGE Design Build market demand supply chain trends
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