Construction Industry Trends: April 2023 Construction News Roundup
While April was generally mixed for the construction industry, the small positives that we’ve seen building up over the course of the last year are starting to turn into real progress—and more silver linings might be on the way. For this month’s news roundup, we’ll take a look at promising market opportunities, the potential for AI to improve efficiency for contractors, and whether construction hiring is more boom or bust so far this year.
Promising Outlook for Future Growth
The global construction industry market size is on track to grow to a value of USD 17,247.96 billion by 2029 with a compound annual growth rate (CAGR) of 7.3%. For perspective, the construction industry was most recently valued at USD 11,561.40 billion in 2020. Significant growth is expected in the building category of construction in the coming years—especially as more than $1 trillion in funding for the Bipartisan Infrastructure Law (BIL) begins to roll out in the U.S. over the next eight to 12 years.
Asia Pacific Region
The Asia Pacific region is projected to experience the most growth and opportunity over the next six years, according to the same Global Construction Industry Market report. Countries in the Middle East and Africa are well positioned to experience rapid increases in market revenue, but even combined they pale in comparison to the Asia Pacific region which is expected to dominate in this respect.
Growth is being driven by the rising per capita wealth and improving economic conditions in developing countries with new populations of consumers with disposable income to spend in commercial spaces that need to be built. Specifically, the heavy and civil engineering sectors of the construction industry have experienced the most growth in these countries.
Commercial & Residential Sector Expansion
The commercial sector is expanding in these developing countries as their governments increase spending on infrastructure. However, the demand for residential construction in these countries will still outpace commercial construction.
During this forecast timeframe, there will also be opportunities for developers working on environmentally friendly structures with low carbon emissions. These structures are increasingly in demand as more companies continue committing to “going green.” Even residential homes with a lower carbon footprint are more appealing to homeowners in these emerging countries. Climate-friendly homes can reduce carbon emissions and save homeowners money in the U.S.
Governments around the world have also begun to impose strict regulations on practices they say are harmful to the environment as more commit to reaching net-zero emissions by 2050. As a result, some construction companies have had to change how they operate to maintain compliance, avoid fines, and preserve their ability to work on lucrative government projects like the BIL.
Land Planning & Development
These new environmental regulations have created an increased demand for land planning and development services which are expected to account for the greatest revenue share over the projection period. Land planning and development services are also being used to optimize resource utilization which has been in demand ever since unpredictable supply chain delays first became an issue.
Automation and the Internet of Things (IoT)
Automating construction machines will make job sites safer, more efficient, and cost-effective—all of which will drive up revenue in the construction market in the coming years as the technology becomes more commonly accessible for companies to implement.
Variable Raw Material Pricing
The biggest restraint for the market in meeting this demand over the next few years will be the variable pricing of raw materials. The persistent challenges in acquiring natural resources on time for a project and for a reasonable rate due to material scarcity or supply chain disruptions have contributed to the ongoing need for land planning and development services.
Job Boom in Construction? Depends on Where You Look
There are plenty of job sectors within the field of construction that are on a path of steady growth, but the industry as a whole continues to face challenges in finding enough workers to meet demand as more workers reach retirement age. This has remained true even as the industry is set to be infused with $550 billion in new spending on roads, railways, bridges, and broadband internet over the next several years as part of the BIL funding package.
Job Application Decline & Job Vacancies
These funds could be rendered useless if they cannot fill the already-open job positions in construction. Contractors have recently seen declines in application activity. The industry employs 1.1% more people than it did in 2018 but still has not recovered as much as it needs to. The BIL has not set aside adequate funding to train individuals for these vacant positions that are only adding to the construction labor deficit. The money is there, but not the people. Which leads us to our next issue....
Trade Teacher Shortage Impact on Talent Pipeline
The initiative to expand training for construction trades began well over 10 years ago as an industry with more workers retiring than could be replaced by current talent pipelines. There are plenty of students interested in learning the construction trade right now, but many of them are stuck on long waiting lists as they are confronted with another shortage—qualified teachers. In a profession where there is far more money working in the trade itself, there is currently not enough incentive for people to choose to teach the trade instead.
Possible Rebound in Sight
According to one data firm, the construction industry is finally showing signs of rebounding after the sector employed almost eight million people at the start of 2023. This marks the highest number of people employed in construction since the pandemic began when levels were around six million. While construction still has a long way to go before it no longer is in a hiring crisis, there is finally hope that the industry can start closing the labor gap.