Construction spending will decline 2 percent this year, compared to 2022, mostly due to a decline in residential construction, according to a report from FMI Corp.
The “2023 North American Engineering and Construction Industry Overview” notes near-record inflation, supply chains disruptions across global markets, and shortages of talent as conditions that threaten both new and projects.
For an analysis of the 2023 outlook for fleets, see the 2023 Annual Report and Forecast.
“Given this uneven landscape, it is critical to understand your core competencies, markets, and clients to compete in 2023,” wrote Chris Daum, CEO, in the introduction to the report. “Knowing your opportunities and challenges and having a plan for tackling them will help your company continue to be successful. Furthermore, firms that focus on their people and culture and execute a clear strategy will be more likely to weather the upcoming downturn.”
FMI Partner Jay Bowman discusses the first quarter overview in the video below.
Key 2023 outlook for construction
- Total engineering and construction spending for the U.S. is forecast to end 2022 up 8 percent, the same increases as in 2020 and 2021, all led primarily by residential construction.
- High-growth segments in 2022 are expected to include multifamily, residential improvements, commercial, manufacturing, sewage and waste disposal, water supply, and conservation and development construction, each with annual growth rates exceeding 10 percent.
- A limited number of segments are expected to end the year with growth rates between 0 and 4 percent, or roughly in line with historical rates of inflation. These segments include lodging, office, educational, transportation and communication.
- Only the religious, public safety, and power segments are expected to decline in 2022. Real losses in output (e.g., square footage, installed capacity, etc.) are projected to be significant, especially in power.
- The latest Nonresidential Construction Index (NRCI) score of 46.4, nearly flat from the previous quarter’s score of 46.3, suggests ongoing concerns heading into the first quarter of 2023. The index has remained under 50 for three quarters and indicates fewer future engineering and construction opportunities into 2023.
Source: FMI Corp.
About the Author
Rod Sutton
Sutton has served as the editorial lead of Construction Equipment magazine and ConstructionEquipment.com since 2001.
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