The report cautions that inflation, a possible economic downturn and China’s stance on COVID protocols will keep prices high throughout the year. In 2023, the construction industry is expected to shrink by 7 percent.
Linesight, a global construction consultant firm, has released its Q4 Commodity Report, which makes predictions on materials pricing through the start of 2023. The report notes that growth in the industry has been slowed by high input costs, rising interest rates, inflationary pressures and supply-chain issues. Those challenges will be eased by upcoming and ongoing infrastructure projects, as well as government investments in housing. From 2023 to 2026, the construction industry is expected contract.
Key findings of the report include:
- Economic slowdown is expected to continue into 2023
- Inflation is cooling off (6.2% in 2022) but will remain higher than normal, with an average of 4.7% expected for 2023, and will continue to push wages higher
- The rate of unemployment is low, but is expected to increase in the next few months due to lower economic sentiment and reduction in spending, though this should not affect the cost of labor for mission-critical and life sciences work, where a shortage of skilled labor will continue
- From an equipment standpoint, short supplies of electrical steel are causing issues with transformers
- Rising demand for aluminum, copper, and nickel will drive prices up on electrical and construction projects
- Interest rates and recession fears may apply downward pressure on copper prices in the short term, but this will be offset by investment in the transition to clean energy
The report cautions that inflation, a possible economic downturn and China’s stance on COVID protocols will keep prices high throughout the year. In 2023, the construction industry is expected to shrink by 7%.