Dodge Construction Network Chief Economist Richard Branch says in the network’s Q3 report that there remains a cause for the construction industry to retain some optimism despite ongoing economic uncertainty and labor challenges.
"Overall, the industry remains very resilient, despite what seems like a tidal wave against the sector in terms of material prices, labor shortages and what appear to be higher interest rates and a slower economy,” Branch says in the report. “Near-term, one thing that is reasonably unique is that everyone is counting on infrastructure dollars to provide stability.”
He noted that from an economic and technological standpoint, the construction industry has an opportunity to make great strides because of the incoming government funding directed at promoting infrastructure and manufacturing.
Still, Branch advises caution, because much of the funding still needs to be appropriated by Congress annually, which can be a slow process and lead to some uncertainty.
Overall, he says, discussion of recession, supply issues and ongoing labor challenges does not seem to shake contractors' confidence.
According to the report, based on Branch’s analysis of the Dodge Momentum Index (DMI), which tracks the overall health of nonresidential building projects, owners and developers are looking beyond current economic concerns when it comes to moving forward with projects. The DMI has yet to show signs of stress amid any recession fears.
The report states that the DMI has shown overall increases across commercial and institutional components. Despite weak institutional planning activity in August, the DMI remained elevated in August, just a notch below July’s 14-year high. This indicates continued confidence from owners and developers that nonresidential building projects will be realized in the coming year.
