Construction continues to expand, with nonresidential sectors, including civil, growing at a steady 6%, matching 2023’s pace, according to FMI’s 3rd quarter outlook. However, there are challenges ahead. Rising interest rates, inflation, and tightening credit markets are causing project delays as private owners reassess new developments. Previously booming markets, such as multifamily, lodging, and commercial sectors, now show signs of overbuilding. Many are awaiting the movement of interest rates and the outcome of the fall election cycle to determine the next steps.
Despite these hurdles, certain sectors remain resilient. Data centers, battery/electric vehicles, infrastructure, energy, water, healthcare, and higher education continue to show strength. The Infrastructure Investment and Jobs Act (IIJA), which authorized $1.2 trillion for transportation and infrastructure spending in 2021, has already led to nearly $400 billion in projects across 40,000 initiatives by the end of 2023.
While the industry has overcome the logistical issues caused by the COVID-19 pandemic, high inflation continues to impact material, labor, and equipment costs. These rising expenses are squeezing contractors’ budgets and profit margins, creating a more challenging environment.
In this climate of uncertainty, robust risk management and transfer solutions are essential to help contractors protect their bottom lines and position themselves for growth.
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