US market intelligence: maintaining momentum 

Can the US construction industry continue to move forwards at pace?   

America’s economy and its construction industry set itself a dauntingly high bar in 2023. Yet, while growth predictions for 2024 are optimistic, sentiment is fading, and headwinds are building.  

Residential and commercial real estate face a growing series of challenges, while infrastructure’s outlook is positive and supported by several policy commitments. From a regional perspective, the West Coast is lagging behind hotspots in the Central South and resilient East Coast.  
 
Input cost pressures, particularly from a materials perspective, are alleviating, but labor and machinery, as well as equipment costs remain elevated. As a result, bid price escalation is recalibrating downwards, yet this is a slow process, bolstered by resilient demand conditions.  
 
Hanging over everything is the unanswered, and unanswerable, question of what political direction the country will take when the next Presidential administration takes office. Traditionally, such election uncertainty has had a pessimistic effect on capital investment. But, with US construction beginning 2024 from a position of strength, the industry will hope to start as it means to go on.  

US construction industry continues to perform well, despite growing headwinds 

The strength seen in the wider economy has seemingly translated into the construction industry. Seasonally adjusted construction spending, measured in current values at annual rates, has increased by 3.9 and 13.1 percent in the quarter and year, respectively, as of Q4 2023.  
  
Infrastructure remains strong and grew by 18.5 percent on the year in Q4 2023, benefiting from congressional spending arising from the Infrastructure Investment and Jobs Act and Inflation Reduction Act. Supply chain diversification, and a continued pivot to onshoring, has unlocked new opportunities and investment in manufacturing, helping the sector to grow by 64.6 percent.   

Sustainability trends have also contributed to spending in both sectors, with more electric vehicle (EV) plants being built and charging stations sprouting in many parts of the country. 

Furthermore, healthcare and education spending levels remain solid, growing by 15.4 and 18.6 percent on the year in Q4 2023. For education, spending is fueled by trends in life sciences and many campuses updating their amenities to attract enrollment. Additionally, the research boom that emerged from COVID-19 is continuing, with funding sourced primarily through government grants.  

Ready and resilient, whatever the election outcome   

After expanding by 7.1 percent in 2023, the outlook for the US construction industry remains broadly positive. However, headwinds are gathering, and clients should review the resilience and responsiveness of their delivery model to ensure they are ready for, and able to adapt to, whatever administration next January brings.