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August 2021 Construction Industry Update Highs and Lows

AUGUST 2021 CONSTRUCTION INDUSTRY UPDATE: HIGHS & LOWS

The construction industry is divided up into a variety of sectors: commercial, industrial, heavy civil, non-residential, and residential. The industry news resource Construct Connect released a construction economic snapshot at the beginning of August and published the following data.

Currently the largest sectors of growth from June 2021 to July 2021 are

  • Residential
  • Industrial
  • Private Office
  • Heavy Engineering
new residential construction

From January – July 2021 hospitals and clinics grew in revenue

  • Hospitals and Clinics

For year to year increase the following sectors grew by at least 15%

  • water/sewage
  • government office buildings

All sectors were down in 2020. The current value of construction projects is $37.6 billion, an increase of 11.3% from 2020. On the other side of the growth coin is the anticipated delays and cancellations that are also ongoing due to delayed shipping of materials, increased material cost, increased demand to abide by new and stringent safety protocols, and the ongoing need for skilled trades people.

The Associated General Contractors of America (AGC) recently released a report on Construction Hiring and Business Outlook citing water and sewer construction growth along with warehouse and healthcare growth. Overall the industry’s General Contractors are not too optimistic due to delayed projects, canceled projects, and delayed materials.  Much of this outlook is region specific.

NEED A JOB? THERE ARE MANY POSITIONS AVAILABLE IN CONSTRUCTION

Jobs in construction rose by 11,000 in July 2021 with a year-to-date of 21,000. Compared to last year, employment in construction is up 3.1%, falling behind the total employment growth of 5.2%. With the infrastructure package that passed the demand for skilled construction jobs is high and so are the wages. Labor unions expect to increase hiring by 25%, open shop by 40%.

Now is a great time to enter the industry with pay rates shifting higher by 4.7%. Although pay depends on location. According to Zippia, the top five paying states are

  1. New Hampshire
  2. Connecticut
  3. Washington
  4. California
  5. Maine
us employment

Looking forward into the second half of 2021, economists are positive about the industry’s growth projections even though the industry is experiencing a shortage of materials and delayed shipping times as the supply is struggling to meet the demand of jobs across the country causing prices to climb. In April of this year, the Producer Price Index documented a 24%. Increase in the cost of construction materials.

HOW HAS THE STIMULS AFFECTED THE CONSTRUCTION INDUSTRY?

The stimulus provided through the 2020 Coronavirus Aid, Relief, and Economic Security Act (CARES Act) released millions of dollars into the economy. This raised the demand and Producer Price Index (PPI) for construction materials in 2021 24% higher than 2020.  This price increase combined with shipping delays has offset many a construction schedule and budget, putting many jobs in the cue at risk of a longer delayed start. For example:

  • Lumber costs jumped over 300% from pre pandemic costs
  • Steel costs soared over 215%, by some studies over 500% past 2020 costs this cost is seen in home appliances, skyscrapers, hotels, HVAC systems
  • Diesel fuel showed the largest year over year price increase in April 2021 at 126.7%
  • Aluminum increased 20.5%
  • Copper and Brass increased 49% year over year
  • Plastic experienced a 14.2% increase

Concrete costs are stable but expected to increase.

With today’s long delivery times and short cost guarantees, estimators are challenged in finalizing project costs. 2021 will be a year that will make or break many small construction companies.

WHAT THIS MEANS FOR ONLINE CONSTRUCTION EDUCATION

2020 students rushed in for Winter and Fall terms with Spring and Summer smaller. 2021 on the other hand shows great consistency from Winter to Spring. Summer slowed slightly but we are anticipating a very full and active Fall term.

Zoom was utilized by one of our instructors this term and more are looking into incorporating one of the new necessities of work and education life. More construction industry associations are inquiring to offer the online STP classes which are growing in popularity.

Our online classes bridge the many gaps for new employees, provides support for men and women transitioning from the field to the office and the office to the field. Students gain resources, industry contacts, insights into how job sites are run, software used, and practices in play across the country. Students leave our certificate programs with confidence, resources, and a lot more to add to their industry and their company.

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