Chief Economist, MOCA Systems, Inc.
This quarter’s edition highlights the remarkable strength in the nonresidential construction market, even in the face of continually high inflation. Some materials prices are leveling off and even falling, though, and contractors are able to roll high inputs costs into their bids. That is a delicate balance, though — profit margins are forecast to fall as owners balk at increasing bid prices. Scarce skilled labor also continues to be an issue. Our focus continues to be on the primary drivers of selling price to owners.
Much talk today is about an impending recession, but you wouldn’t know it by the way owners are building. Labor supply and increasing wages are the top impediments to growth, as materials prices appear to have peaked. While backlog is currently healthy, an increasing number of forecasts calls for trouble in 2023. Nonresidential construction has surged in the most recent quarter, far outpacing what had been a red-hot housing market.
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