New reports bode well for the construction industry but increased demand can create challenges for hiring managers.
- Major construction firms are securing more projects due to increased federal infrastructure funding
- The infrastructure backlog rose by 24.4% in August, making it 5.7% higher than the previous year.
- Data indicates a potential surge in upcoming public works projects.
“There’s no sign of a construction recession in the near term,” said ABC Chief Economist Anirban Basu. “If anything, contractors are more upbeat, as policy and technology shifts along with economic transformation, are creating substantial demand for improvements and growth in America’s built environment.
“While a plurality of contractors expects only small improvements in sales, profit margins and staffing over the next six months, even incremental improvement is remarkable in the context of tightening credit, higher project financing costs and lingering fears of recession,” said Basu. “Backlog continues to be at the upper end of historic levels, with the infrastructure category registering substantial gains in backlog in August. That suggests that a growing number of public works projects is poised to break ground.”
Construction’s Biggest Companies Booking More Jobs Amidst Federal Infrastructure Push
Construction’s major players are securing more projects as federal funding boosts infrastructure activities. However, companies with an annual revenue of less than $100 million are finding it challenging to maintain their backlog momentum, as per the analysis by Associated Builders and Contractors (ABC). Despite challenges like tightening credit, high financing costs, and looming recession concerns, there was a 24.4% increase in infrastructure backlog in August. This has kept the overall backlog 5.7% higher than what it was in August 2022. Anirban Basu, ABC’s chief economist, highlighted that the backlog remains at the higher end of historical levels, indicating a surge in public works projects ready to commence.
The Changing Dynamics of Residential Construction Hiring
The residential construction sector is hinting at a seasonal slowdown, a trend that’s been observed in recent times. While the construction industry, in general, is witnessing a surge in demand, the residential sector is experiencing a different dynamic. The demand for labor in the residential construction sector is high, but hiring has not kept pace. This could be due to various reasons, including the availability of skilled labor, wage expectations, and other external factors.
ABC’s Construction Backlog Indicator Steady in August, Contractors Remain Confident
The Associated Builders and Contractors (ABC) recently reported that its Construction Backlog Indicator saw a decline, settling at 9.2 months in August. This indicator is a unique economic measure that provides insights into the amount of work that commercial and industrial construction contractors anticipate in the upcoming months. Despite the slight decline, the Construction Confidence Index, another key measure by ABC, suggests that construction contractors remain optimistic about future sales, profit margins, and staffing levels.
ABC: Nonresidential Construction Dominates Industry Job Creation in August
In August, the construction industry witnessed a net addition of 22,000 jobs, as per the analysis by the Associated Builders and Contractors (ABC). This growth emphasizes the significant role of nonresidential construction in driving job creation within the industry.
Implications for Construction Hiring Officers:
The construction industry’s current landscape presents both challenges and opportunities for hiring officers. With a surge in infrastructure projects, there’s a higher demand for skilled labor. However, the seasonal slowdown in the residential sector means that hiring officers need to strategize differently for different sectors within the industry. Hiring officers should look at diversifying the skill sets of their workforce, be prepared for wage negotiations, and focus on long-term planning.
The surge in infrastructure projects presents immense opportunities, but the seasonal slowdown in the residential sector poses challenges. Hiring officers play a crucial role in navigating these dynamics and ensuring that the industry has the right talent to meet the growing demand. Condustrial recognizes that each company has its own unique needs, consequently, we partner with each one to design and deliver a cost-effective, customized solution to assist our client in achieving their desired goals.
