As the passage of the infrastructure bill offers encouragement, new challenges—inflation and the Russia-Ukraine conflict among them—are impacting the outlook for the construction industry.
While the surge of the COVID-19 Omicron variant is subsiding, pandemic-induced problems remain. Supply chain issues continue to plague all levels of the construction industry, from raw materials to finished products, as pent-up demand for building supplies grows. A spike in fuel prices and a shortage of truck drivers are still slowing overland transit of goods, a condition exacerbated by lack of warehouse space.
Significant recent events—the Russia-Ukraine war and inflation—are now compounding the current picture. The conflict in eastern Europe is likely to affect costs and availability of some key materials; Russia is a major producer of copper and aluminum. Inflation is on the rise, pushing prices across the board higher.
It’s a complicated situation. While the bipartisan passage of the $110 billion Infrastructure Investment and Jobs Act is a major step forward, it remains to be seen how inflation will affect its implementation.
Julian Anderson, FRICS, President of North America
A few key insights:
- The U.S. quarterly national average increase in construction cost is approximately 1.58%, compared to 8.04% year-over-year
- The U.S. Gross Domestic Product (GDP) is 7.0%
- The Architectural Billings Index (ABI) was unchanged from the previous month’s 51.0 (This option if want to refer monthly)
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