Construction industry faces challenges despite infra bill Gregory, Senior VP – Wells Fargo, 2022. [https://www.monitordaily.com/opinion-posts/where-the-construction-industry-is-heading-in-2022/ Where the Construction Industry is Heading in 2022 by Peter Gregory June 2022 Peter Gregory is a senior vice president for Wells Fargo Equipment Finance, the equipment finance and leasing affiliate of Wells Fargo Bank. Based in Atlanta, Georgia, he is the national manager for the construction manufacturer and dealer services group. His team provides manufacturers and their distributors loan and lease solutions for their inventory and rental fleet equipment financing needs in the U.S. Gregory has held various positions in his 33-year career in the construction-equipment finance field. Prior to Wells Fargo, he served in increasing senior leadership roles at CitiCapital Commercial and GE Capital Solutions.
Nonresidential construction is trending upward in 2022, but most of the newly passed $1 trillion infrastructure bill will take significant time and effort to plan and execute. Peter Gregory, senior vice president and national manager at Wells Fargo Equipment Finance, analyzes trends to interpret where the market is going and the underlying reasons our economy is heading for a mild recession in 2023.
Each year brings new challenges in the construction industry, and 2022 is no different. COVID-19has been with us for more than two years, and the decisions made by governments and businesses in the early stages of the pandemic are still affecting the marketstoday – and will for some time.
As we talk with companies across the industry, including OEMs, distributors and contractors, we hear from each sector what excites them about the industry as well as what keeps them up at night. Many industry executives are optimistic and expect increased growth in the non-residential space for the remainder of 2022. However, with so much economic uncertainty, there isstill a level of caution. Below is a current snapshot of the industry and common themes companies will continue to see through 2022.
The State of the Industry in 2022
The November passage of the $1 trillion infrastructure legislation will provide a generous lift for increased spending in the non-residential business sector in 2022 and beyond. While the legislation lays out the funds for the work, most of it is not “shovel ready” and takes a tremendous amount of time to plan, bid and prepare for the work to begin. Prior to its passage, many states had put together lists of projects with their respective departments of transportation, but did not have the funding to complete much of the needed work; this bill will help with that. The bigger projects, like rail, will take much more time and planning and this work will go out over many years. The Architectural Billings Index (ABI), an economic indicator for nonresidential construction activity, has been used in the construction industry for more than 20 years and has a lead time of nine to 12 months. The ABI ended 2021 at 52, which generally means a positive outlet because any reading above 50 indicates growth. At the beginning of 2022, we saw a slight decline at 51, but it bounced back in March and April with improving scores of 58 and 56. There is speculation that these increases may reflect an urgency to beat the continued interest rate hikes coming from the Federal Reserve.