According to a study by ResearchandMarket, construction equipment accounted for almost half of the market share in 2020, pushed by an increase in construction spending by the U.S. government and its support for equipment with advanced technology in the areas of power, energy, manufacturing, transportation, and hybrid vehicles, among others. The Airport Development Projects One are among the large public infrastructure projects.
The forecast is for its compound annual growth rate (CAGR) to stay at 6.23% from 2021 to 2027. By 2027, the estimate is that the country’s construction equipment market size will be $32.68 billion. Caterpillar leads the major vendors. In second place is John Deere, followed by Komatsu.
Construction follows the ebb and flow of the economy, though. In the current pandemic, this differs from normal times.
Overall Construction Spending
In December 2021, according to U.S. News, overall construction spending in the country increased by only 0.2 percent, much lower than the 0.6 percent increase in November. Compared to December 2020, though, spending increased by nine percent. If the whole of 2021 is assessed, it will show that the total construction spending increased by 8.2 percent.
Close to this, ING analysts stated that total annual construction spending increased by 8.1 percent from December 2020 to November 2021. They predict a much lower three percent growth in total construction spending for 2022, though, and six percent for 2023.
Dodge Construction Network’s analysis has a different view. Its estimate of the total construction spend increase for 2021 is higher at 12 percent. For 2022, its forecast is an annual six percent increase in construction start, double that of ING. This is higher than Dodge’s estimate for 2019 but below the 2021 level.
Prices of construction materials are still increasing and are 30 percent higher than prices in 2020. Dodge expects the prices to continue rising up to the middle of 2022, stabilize for a while, and then continue to stay high up to the end of the year. High costs affect the number of projects undertaken.
Delays in the delivery of construction materials impact 60 percent of small builders. There are also shortages in materials and labor. These cause delays in building starts and completions. By the end of 2021, new construction projects took nine months longer to start than those before February 2020.
Residential Construction Spending
According to ING analysts, within the 2021 construction spending, residential construction spending rose by 12.8 percent to $806 billion. In 2022, they predict an eight percent decrease in residential construction spending to $790 billion.
Data from Dodge show that there was a 14 percent increase in single-family residential construction in 2020 at 950,00 units, and an additional 14 percent increase in 2021 at 1.09 million units. For 2022, there is a projected three percent increase at 126,000 units. For multifamily residential construction, there was a one percent decrease in 2020 at only 558,000 units, followed by a 16 percent increase in 2021 at 646,000 units. For 2022, there is a projected two percent increase at 659,000 units.
Non-residential Construction Spending
ING analysts stated that in 2021, non-residential construction spending rose by 3.8 percent to $820 billion. This year, they predict a seven percent increase to $920 billion for non-residential spending.
Dodge data shows that overall commercial construction covering offices, warehouses, stores, hotels, and parking decreased by 20 percent in 2020 to $111 billion and then increased by 15 percent in 2021 to 128 billion. In 2022, there is a projected increase of 12 percent to $143 billion.
For institutional construction, there was a 10 percent decrease to $129 billion in 2020, followed by a five percent increase to $136 billion in 2021. Dodge foresees that spending will increase by six percent to $145 billion in 2022.
Spending for highways and bridges was $82.2 billion in 2020, decreasing to $81.2 billion in 2021. It is expected to increase in 2022 to $86 billion.
Warehouse construction increased by 14 percent in 2020 to $34.3 billion, followed by a 36 percent increase in 2021 to $46.7 billion. It is projected to increase by 13 percent in 2022 to 52.8 billion.
Spending on retail industry construction decreased by 26 percent to $12.3 billion in 2020, then increased by 10 percent to $13.6 billion in 2021. It is forecast to increase by 14 percent in 2022 to $15.5 billion.
Hotel construction spending decreased by 51 percent in 2020 to $8.7 billion and further decreased by 18 percent in 2021 to $7.1 billion. It is predicted to increase by 24 percent in 2022 to $8.8 billion.
Despite the forecasts for slow construction growth this year, it is not surprising because of the continued effects of Covid-19 Omicron. At least there is some positive movement forward, which will hopefully build momentum.