The Construction Industry Outlook for 2024: Another Good Year
The construction industry saw record growth in 2023.
According to The American Institute of Architects’ (AIA) Consensus Construction Forecast Panel, the nonresidential construction sector grew by nearly 20 percent this year. “That pace of growth hasn’t been seen since the construction boom years leading up to the Great Recession,” writes AIA Chief Economist Dr. Kermit Baker.
While that level of expansion isn’t expected to last through 2024, construction executives are confident the industry will continue to grow and add jobs over the next year. More than 83 percent of respondents to Engineering News Record’s (ENR) survey on confidence in the construction industry see either a stable or improving market over the next 12 to 18 months.
Commercial Construction Industry Growth Will Slow in 2024
Most industry experts agree that the industry’s growth rate in 2024 will not keep pace with that seen in 2023.
“Construction continues to defy the downward gravitational pull of tightening credit conditions,” says Anirban Basu, chief economist at Associated Builders and Contractors (ABC). “That said, industry headwinds grow in force,” he adds. It’s unlikely the current level of growth will persist against developing obstacles, such as supply chain issues, labor wage increases, and a shrinking economy, Basu warns.
In fact, the AIA report indicates an expected two percent increase in overall building spend in 2024. That’s a significant decline, and has some contractors making more conservative business decisions.
“There is a lot of hesitation in the marketplace,” says Ben Sietsema, owner of development company Honeycrisp Ventures in Ada, Michigan. “We’re focusing more on a little bit more conservative projects.”
While that pull back may contribute to constriction in the industry, it isn’t indicative of an impending recession. “The risk of recession is receding, rapidly,” says Neil Dutta, managing director, head of economics at Renaissance Macro Research. The fact that the construction industry is still hiring workers is a strong indicator that the economy isn’t as bad off as some economists predicted it would be by the end of this year.
The Construction Industry Outlook is Positive: Will Add Jobs in 2024
There is an ongoing labor shortage in the construction industry. According to data reported in July by ABC, there are 400,000 unfilled jobs in the sector. The construction demand boom of the past year along with workers retiring at a faster rate than new workers entering the industry has created a vacuum of skilled workers in the industry.
It’s a problem that’s not going to be resolved anytime soon, either, says Basu, in a CNBC article.
In fact, filling labor gaps will continue to be a challenge for the industry in 2024 as it is expected to continue to add new jobs on top of the large number of already unfilled roles. According to the Bureau of Labor Statistics (BLS), the construction sector is expected to have the largest increase in employment than any other sector, adding 790,400 jobs through 2024.
While that’s good news for trade contractors, the industry as a whole, and the economy, it’s also causing some panic as workers become more difficult to find. But there are things your company can do to help fill those gaps.
Consider ways to do more with the people you already have. By investing in reskilling and upskilling opportunities, you can plug skills gaps with current employees. You should also reach out to local high schools and vocational schools to connect with students and show them the path towards a rewarding career in the construction trades.
“It would also be helpful to present the industry as what it is — not just guys in hard hats wielding big tools, but a sector of many differently skilled, well-paid jobs that offers satisfying careers,” write McKinsey & Company’s Garo Hovnanian and Adi Kumar.
Hiring and retention may not be enough, however. You may also need to find efficiencies in processes to enable your teams to be more productive. Construction reporting software, like eSUB, creates those efficiencies.
This is the result that Eckstine Electric in Colorado is seeing after implementing eSUB to get more real-time insights into real-time labor, time, and project activities. “eSUB replaces manual processes with digital delivery workflow (preview, submitted, approved, etc.) to keep projects on schedule and efficiently increases employee productivity by 10-25%, per week,” says Renee McEntee, lead project coordinator at Eckstine Electric.
To see how eSUB Cloud can help you maximize productivity in 2024, schedule a demo today.
Images used under license from Shutterstock.com.
