CONSTRUCTION, TRADES & MATERIALS
In 2023, the United States is expected to witness a significant contraction of 5% in construction output, primarily driven by the collapse in residential construction. Construction industry leaders will face various challenges, including rising interest rates, inflation, supply chain disruptions, and increased material costs. However, non-residential construction is anticipated to display relatively more stability and resilience due to government stimulus, with the civil engineering sector emerging as the fastest-growing segment in the industry. Additionally, the construction industry will continue to invest in renewable energy and green infrastructure, aligning with the global aim for a less carbon-intensive and more sustainable future.
Different sectors within the construction industry are projected to exhibit varying behaviors. Sectors such as concrete, plumbing, electrical, masonry, and HVAC are experiencing price increases, while metals, openings, finishes, and furnishings are stabilizing. Conversely, sectors such as wood/plastics/composites, thermal, energy, and transportation are expected to see price declines.
TRENDS & CHALLENGES
The construction industry, like many others, is heavily influenced by technology and sustainability trends in 2023. There is an increasing emphasis on LEED certification and sustainable construction standards. Prefabrication and modular construction methods are gaining popularity due to their advantages, including reduced construction time, cost savings, and improved quality control.
The adoption of digital solutions for planning and implementation will be a differentiating factor for success in the construction industry. However, the industry continues to face challenges in attracting and retaining skilled labor.
Construction costs are projected to moderate in line with broader inflation, and construction activity is expected to grow by 4% to 6%. Construction methods that offer advantages in terms of speed, cost-effectiveness, quality control, and sustainability will continue to experience growth. Sustainable practices will gain prominence as the industry strives for environmentally responsible solutions. Investment in digital technologies will be crucial for reducing costs and enhancing project execution.
Disclosure: These key performance indicators are based on industry averages for a company with $10 million in revenue. The KPIs are not specific to the operational performance of your company or your sub-sector.
The information contained has been obtained from different sources deemed reliable, including DealStats, Deloitte, Dun & Bradstreet, and Business Reference Guide. Pacifica Advisors does not make any representation or warranty as to the accuracy of the data. PA is a mergers and acquisitions (M&A) advisor and business broker.