Weakening demand has improved some construction equipment and material prices over the last quarter, but volatility is likely to continue into 2023, according to the latest market conditions report from Gilbane Building Company, one of the largest privately held family-owned construction and real estate development firms in the industry.
Jay Pendergrass, director of supply chain management and equipment for Gilbane, remains cautious:
“We have seen measures of supplier performance, delivery times, backlogs and shortages showing some improvement; however, risks remain for the supply chain for the foreseeable future.
“The continuing Russia/Ukraine conflict, uncertainty around the market’s response to the Federal Reserve’s monetary actions, port labor talks and other transportation disruptions, and new Covid lockdowns in China all continue to influence the supply and demand side for project materials and for cost and availability of equipment and materials.”
While continued tighter financial markets, slower growth and sustained improvement of supply bottlenecks could ease prices in the last quarter of 2022, Pendergrass noted that it will take some time for markets to adjust:
“There are equipment and materials where we see a much longer duration of increased escalation and long lead times. Once inflation does peak, it will be a slow process for the costs to unwind on a global basis.
"While inflation rates may decrease, they remain at a level that is higher than typical. With global demand slowing and supply constraints easing in some areas, global inflation may moderate in 2023 and 2024 to more historic levels.”
