The construction industry is grappling with the implications of rising interest rates, inflation, and changing economic dynamics, according to Marcum’s 2023 National Construction Survey.
The survey covers a range of topics, from top priorities to problems, strategies, possible solutions, and the influence of a potential recession on the industry. The 2023 edition is the fourth iteration of Marcum’s national industry study.
Among this year’s key findings, companies are struggling with rising inflation and interest rates, with 50% expecting project delays or cancellations. Over half anticipate difficulty in passing expenses onto customers.
More than most, construction firms feel the sting of higher lending rates. Respondents in the survey pointed to a significant decline in the ease of obtaining financing, down to 4% from 19% last year. The survey also indicates increased difficulty in obtaining bonding. This issue is especially acute for firms with leveraged balance sheets and thin capital.
Despite the challenges, the industry outlook is far from bleak. The survey reveals that the construction industry is showing impressive resilience. Just 32% of respondents are expecting a lower backlog this year, and those expecting a higher backlog are at 41% this year, just a 7% drop from the previous year.
Additionally, supply chains have improved, and material costs are stabilizing, with some sectors reporting declines. A sustained demand for skilled labor indicates underlying economic robustness.
“The survey’s results confirm what we have long known – the construction industry is not just about bricks and mortar but innovation, resilience, and adaptability, ” said Joseph Natarelli, national leader of Marcum’s Construction Services practice. “Despite the current economic challenges, many firms view this as an opportunity to redefine their operations and strategic planning. We are confident that this sector’s dynamism and tenacity will enable it to emerge stronger.”
Other key findings of the 2023 report include the following:
“Despite the economic uncertainties brought about by the interest rate environment, our survey indicates a clear trend of resilience in the construction industry,” said Marcum Partner Roger Gingerich, who leads the firm’s Midwest construction practice. “The progress we’ve seen in areas like supply chain optimization and strategic planning is particularly impressive. While it’s a challenging landscape, our survey demonstrates the construction industry’s ability to navigate and adapt to these complex circumstances.”
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