The new year’s dawn brings optimism for new projects and possibilities in the construction and contractor industry. According to multiple surveys, the construction industry is optimistic that 2022 will be full of projects and experience robust profit.
This is a stark turnaround from the industry’s gloomy 2021 forecasts that reported low optimism for the year.
The positive outlook is primarily attributed to the passage of the Government’s Infrastructure Bill, overall improvements in the economy, and specific increases in demand for construction projects.
Construction businesses and contractors who want to take advantage of the year’s opportunities can set themselves up for success with new heavy construction equipment.
CONSTRUCTION INDUSTRY SURVEY
The 2022 construction surveys show industry-wide confidence in project availability and profit opportunities. The Infrastructure Bill is a huge reason, but private projects are also predicted to increase compared to 2021.
The Wells Fargo 2022 Construction Industry Forcast reports that 54% of construction businesses and contractors predict an increase in profit in 2022. This number is up 11% from the 2021 survey, when only 41% of the survey respondents believed there would be an increase in profitability. Only 4% of businesses in the survey believe profitability will decrease in 2022.
A look into the data from The Associated General Contractors of America (AGC) reveals that much of the optimism is around projects related to the Infrastructure Bill. The Bill allots $110 billion to roads, bridges, and other major infrastructure improvements. $40 billion is set aside just for bridge improvements.
According to the AGC survey, 63% of construction businesses predict growth in bridge and road projects. This shows that the Infrastructure Bill positively influences the industry’s predictions for 2022.
Beyond government contracts, private projects are also on the rise. For example, the growing need for warehouse space is creating more projects in warehouse construction. 52% of construction businesses predict an increase in warehousing projects.
The increases in projects and profitability in the construction industry are connected to improving the economy. Compared to 2021, labor markets are slowly improving, and consumer demand is as strong as ever.
The industrial markets continue to increase production, driving demand for new physical assets like warehouses and manufacturing centers.
While the labor market is a challenge in the construction and contractor industries, there is reason to believe improvement is on the horizon. According to the Bureau of Labor Statistics, there are 5.7 million unemployed people who want a job in the United States.
As concerns over the pandemic diminish, these people are more likely to accept positions and return to work.
The largest measure of economic growth, national GDP, is predicted to grow 3.5% in 2022, which is above pre-pandemic growth rates. The increase in consumer and industrial activity manifests itself in the construction industry as private construction projects.
Contractors and construction businesses predict increases in the available dollar value for projects on warehouses, manufacturing centers, hospitals, and multi-family residential projects.
The optimism for 2022 is supported by the reality of the improving economy, the Infrastructure Bill, and the unique tax advantages afforded by Section 179. These opportunities open the door for companies to invest in their assets to take advantage of the public and private projects coming this year.
While the labor market is slowly getting better, concern about hiring is still prevalent in the construction industry. According to the US Chamber of Commerce, finding qualified, high-skilled labor has been challenging. Nearly 90% of contractors report difficulty finding skilled workers.
Considering the lack of skilled workers and increasing private and public projects, it is more important than ever to have an efficient workforce. Fortunately, equipping a workforce with heavy construction equipment is economically possible due to Section 179 deductions.
Section 179 in the tax code gives businesses tax deductions when purchasing equipment for work. The deductions can reach up to $1,050,000. This makes upgrading a fleet of construction equipment a smart move going into the busy 2022 year.
PREPARE FOR 2022 BY UPDATING YOUR FLEET
If you are a construction or contractor business looking to capitalize on the many opportunities of 2022, look to Monk JCB for your construction equipment needs.
Monk JCB has 75 years of experience providing reliable heavy construction equipment to companies worldwide. Contact us to learn more about our new Texas location and our products and services.