Despite moving into 2022, we’re still coping with the effects of COVID-19. The pandemic has brought about some unique and challenging problems for the construction industry, which are now nothing new. Material prices are rising, supply chain interruptions are arising, and workers aren’t showing up. Even though these problems won’t completely disappear by 2022, business leaders and economists hope some will improve. Also, increasing government spending will create new jobs. Still, the million-dollar question is whether there will be enough people to do the jobs.
“I am nervously optimistic about 2022,” says Ken Simonson, chief economist for the Associated General Contractors of America. He and other economists and experts in the construction industry forecasted the following trends in the construction industry this year.
Material costs are still very high, and so are the prices of condos for sale in Mississauga, and they may change by 2022.
According to the Labor Statistics Bureau, the overall building material price increased by almost 25% in 2021. Experts don’t think prices will stop going up in 2022 either. Richard Branch, the chief economist for Dodge Construction Network, thinks that prices will keep going up until the middle of 2022, and they will start going down.
The Construction Dive says there will be “more up and down volatility” in 2022, which is better than what happened in 2021 when everything went up.
Lack of Workers
The shortage of labor will continue to hurt the construction industry.
The U.S. Bureau of Labor Statistics says that in July 2021, 4.5 percent of construction jobs, or about 347,000 jobs, were not filled. By November 2021, these numbers had decreased to 4.4 percent, and about 345,000 jobs were still open. Contractor Magazine says that part of this shortage is because the pandemic sped up a natural change in the workforce: “More than five million people over the age of 55 left the labor force, and about 1.5 million of them retired early.” But the fact that the workforce is getting older can’t fully explain why so many Americans quit their jobs in 2020 and 2021.
Contractor Magazine says hiring has remained strong despite the shortage. LaborIQ predicts that construction jobs will grow by 3.9% in 2022. The median wage for construction jobs will grow by 3.9%, and in some large cities, it will grow by over 4.5%.
Increased wages might get some people back to work and make shortages of workers less of a problem in some areas.
Even though the shortage of labor and rising prices of materials and bungalows for sale in Mississauga are likely to continue, there are signs that a recent change, inflation, may help.
Inflation in the U.S. hit a 30-year high of 6.2% in October 2021. Basu says that one good thing about inflation is that people might have to go back to work because goods are getting more expensive. According to Construction Dive, rising prices have prompted developers to lock in contracts before costs increase, leading to more construction.
Basu thinks the Federal Reserve may step in to keep inflation at 3–4%, which could help bring down the prices of some things.
Spending by cities, states, and the federal government should drive construction in 2022.
As part of the recovery effort after the pandemic, the $1.9 trillion American Rescue Plan Act, passed in March 2021, gives $10 billion to modern infrastructures, such as broadband. In 2022, many of these projects should get started.
With the latest Infrastructure Investment and Jobs Act passed on November 6, 2021, $550 billion will go toward transportation, water, and electrical infrastructure. Contractor Magazine predicts that projects funded by that Act probably won’t get going until the second half of 2022. However, contractors of all sizes should be able to bid on that projects this year.
According to Anirban Basu, CEO of Sage Policy Group and economist for Associated Builders and Contractors, local governments will also get a boost from property taxes. A re-evaluation of homes and a massive growth in home values in 2020 and 2021 will give communities a more extensive tax base.
Lastly, millions of dollars are expected to flow into the construction industry in 2022 when the government reinvests in shared resources and spaces.
We are not yet out of danger. Contractors will have to deal with the same problems in 2022 as they did in 2021. Construction companies can now focus on planning for the busy year ahead, including any challenges it may bring, since Omicron is already declining in parts of the country.