2022 Construction Looks Bright Despite Labor and Workforce Problems

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Robison Wells
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The Dodge Momentum Index, a monthly measurement of nonresidential building projects in planning, jumped 8.6% last month, climbing to 162.4 over 149.5 in March; this happened despite hitting its nine-year low in January; the index grew 77% over the previous three months. Healthcare and laboratory projects lead the index, while commercial projects have slipped with fewer warehouses in production. Overall, the index sits 31% higher than in April of last year.

"The institutional component of the Dodge Momentum Index had posted a long string of declines in the immediate wake of the pandemic as state and local governments grew concerned with the potential for widening budget gaps," said Richard Branch, Dodge's chief economist. "However, since hitting a low in January 2021, institutional planning has risen to levels not seen in over ten years driven by healthcare, labs, and education projects."

Branch partially credited the American Rescue Plan in March and an optimistic outlook on COVID for the increased construction planning.

This news pleases contractors when continual problems beset the industry—two that have mainly dominated the news for the last year: the labor shortage and increased material costs.

"Contractors are experiencing unprecedented intensity and range of cost increases, supply chain disruptions, and worker shortages that have kept firms from increasing their workforces," said Ken Simonson, the Association of General Contractors' chief economist. "These challenges will make it difficult for contractors to rebound as the pandemic appears to wane."

April's job increase of only 266,000 new jobs—analysts expected one million—illustrates the workforce problems.

"The fact that employment has stalled—despite strong demand for new homes, remodeling of all types and selected categories of nonresidential projects—suggests that contractors can't get either the materials or the workers they need," Simonson said.

The substantial numbers encourage economists and contractors alike; they indicate that new projects stand lined up for the immediate future. The looming question: will laborers and materials come in time to capitalize on the boost?

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