Construction activity

The value of construction put in place has remained steady.

Although the remainder of 2023 looks increasingly challenging due to the threat of economic weakening, the outlook for US construction is one of growth. A survey conducted by the Associated General Contractors of America and Sage found that contractors are optimistic for 2023, with the net reading — the percentage of respondents who expect the available dollar value of projects to expand compared to the percentage who expect it to shrink — positive for 14 of the 17 categories of construction included in the survey.

Respondents to the Associated General Contractors of America and Sage survey were most optimistic in infrastructure categories, with net positive readings of 42% for both highway and bridge construction and transportation projects, 38% recorded for sewer and water construction and a net value for federal projects of 37%. Despite this optimism, only 5% of respondents said they have worked on new federally funded projects, while 6% have won bids but have yet to start work. A further 5% said they bid on projects but have not won any awards yet, whereas 21% plan to tender projects but say nothing suitable has been offered so far.

The survey responses align with research from Brookings that found “much of the $1.25 trillion in infrastructure spending approved by Congress and signed into law by President Biden is still sitting in the federal government’s bank account, waiting to strengthen and modernize the country’s economy and communities”, representing an opportunity for governments and industry partners to plan projects and start delivery.

Some sectors will be subdued, dampened by the wider conditions, particularly the tighter lending standards for commercial real estate loan categories. Higher construction costs and supply chain and labor availability issues have also resulted in project delays.

However, growing spending from government stimulus will boost the industry in 2023 and beyond, driven by funds from the IIJA, the IRA and the CHIPS and Science Act of 2022.

The IIJA is a significant infrastructure plan to improve the country's roads, bridges, airports and other critical infrastructure systems. Many projects are also progressing through local transportation agencies. Amongst other measures, the IRA includes a $369 billion investment for the modernization of the American energy system, intended to lower energy costs and increase cleaner energy production.

Some pre-existing or time-sensitive projects have moved forward, although the pace of progress varies depending on factors such as funding, regulations and the complexity of projects. There are concerns that inflation could weaken the impact of funding.

The CHIPS and Science Act provides $52.7 billion for American semiconductor research, development, manufacturing and workforce development. The US Department of Commerce launched the first funding opportunity in February. It sought applications for projects to construct, expand or modernize commercial facilities for producing leading-edge, current-generation and mature-node semiconductors, including both front-end wafer fabrication and back-end packaging.