What do construction executives think about the next four quarters regarding confidence in the civil construction market? My name is Taylor Maurer and I am the founder and Senior Managing partner here at Heavy Civil Resource Consultants a boutique search firm specializing in civil construction recruitment. We are business advisors and trusted talent consultants to top civil construction and engineering firms as well as consultants to some of the top talent in the industry.
So many things have happened in the first few weeks of this quarter. I wonder if we were to run the poll again, we might see substantially different results. Let’s Take a look at current events. We are now seeing two international wars rage between Ukraine and Russia and more recently Israel and Palistine. Back in June the government was able to avert a government shutdown and extend the borrowing limit there seems to be some chaos in the GOP which ousted Speaker McCarthy and has been unable to successfully vote in a successor.
And here we are on the heels of another Presidential election year. There also seems to be some doubt surrounding the GOP Presidential candidate which months ago, I think, we all assumed would be Donald Trump. While President Trump is engulfed in legal battles with many in his inner circle pleading guilty, a clear Presidential forerunner has yet to emerge. While Biden has secured a strong infrastructure bill since coming into office, as the oldest serving President in history, many question his health and fortitude for putting in another four years. His son is also embroiled in legal battles and nepotism, further illuminating the elitist and entitlement endemic of our government as a whole and I believe that there are many democrats out there that suspect that Biden will not be able to pull off another Presidential win with many of the states results being so close in the last election.
Let’s look at some numbers:
The Fed kept the target range for the federal funds rate at a 22-year high of 5.25 to 5.5% in its September 2023 meeting.
While the US inflation rate has dropped significantly with rising interest rates, we saw a marginal uptick from a trend low of 2.97% in July to 3.70% at the end of September.
At the end of July, construction had the highest level of open positions ever recorded a whopping 650,000.
Anirban Basu Chief Economist for the ABC stated that “The construction unemployment rate inched up to 3.6% in June, but that’s still the second-lowest rate on record. Across all industries, unemployment remains near a 50-year low, and the prime age (24-54) employment-to-population ratio rose to the highest level since 2001.“
We saw the highest employment gains in Nonresidential Building and Heavy & Civil Engineering.
That can be easily explained but the higher mortgage interest rates yet home prices have not decreased at a rate which one might expect considering the trending higher interest rates.
While many seem to be finding the security in funding in the infrastructure bill and a push in manufacturing, rising material costs and energy costs are eating away at profit margins.
Now that we have covered all of that let’s jump into our poll results. We saw less than a 10% drop in those who felt like there would be strong growth for the next 4 quarters in civil construction. We saw about the same with those who felt like we would see moderate growth in civil construction. We saw the highest rise in those who believed that the civil construction market would shrink by 50% from 10 to 15%. Those that felt like the civil construction market would remain the same or stagnant stayed constant at 22% from the last quarter.
While the 50% increase in those thinking that the civil construction market will shrink may be alarming it is still only 15% of total respondents.
I would love to get your thoughts and feedback on the state of the economy and what the future of the civil construction market looks like to you. Please leave your comments below.
