Construction in North America to grow 2.4%
By Andy Brown12 July 2022
Construction output in North America is forecast to grow 2.4% in 2022 and is expected to reach US$1.94 trillion, up from US$1.89 trillion in 2021, according to a report from GlobalData.
However, this growth is less than was previously forecast due to rising interest rates and prices of materials. The original 2022 forecast for North America was for growth of 4.5%.
Inflation has been rampant throughout the North America region, taking a high toll on its construction output with existing supply chain fragilities having been exacerbated by the war in Ukraine driving up material costs. As a result, the Consumer Price Index (CPI) in the US has risen 8.6% in the past 12 months as of May 2022, sitting at its highest level since 1981.
“The North American construction industry remained relatively stable over the course of the pandemic,” said Jack Riddleston, Construction Analyst at GlobalData.
“Growth was supported largely by the rapid expansion in the residential housing sector which made up for contractions in all other sectors. Where other regions grew rapidly in 2021, North America stagnated, growing marginally as a contraction in the US was offset by high growth in Canada.”
The US construction industry contracted 1.0% in 2021 and has suffered the effects of the poor macroeconomic environment far more than Canada, which is expected to retain much of the growth momentum from 2021 and is forecast to grow 4.0% in 2022.
The surge in material prices and labor shortages are causing significant project cost hikes and delays, reducing funding available for new projects.
Riddleston comments that, “The initial cost expectation of the Des Moines International Airport terminal expansion was US$434 million when it was announced in 2018, however, due to a spike in input costs the project is now set to cost US$733 million, and officials are considering staggering the construction of the project to offset the increase in costs.”