Construction’s Future: Workers and Economic Uncertainty

In the past three months, more than half of firms have continued to turn down work due to workforce shortages. Among firms turning down work, most are being more selective about the projects they are accepting, down from 88% in the first quarter of 2024. And 26% of firms also indicate they are turning down good profitable projects. This is yikes for the construction industry.

This is according to research compiled by The Institute for Assn. and Nonprofit Research, which collected data between September 5 and 18, 2024. This is the fifth annual release of the Engineering and Design Services industry forecast. In 2020, the ACEC Research Institute first commissioned a series of studies to profile and analyze performance in the AEC (architecture, engineering, and construction) industry. Let’s unpack what it found.

Current Construction Trends

The labor shortage is simply one of the challenges for today’s construction firm. General economic uncertainty increased 11 points. Concerns about inflation rose four points from last quarter. Recession concerns increased four points, and increasing interest rates declined 13 points. Double yikes.

Even amid all this, current sentiment remains positive, with it being the strongest in water and wastewater and roads and bridges. Perhaps one of the biggest challenges facing the construction industry is in fact the labor shortage, which is impacting the construction industry’s ability to get projects done.

More than half indicate their firm has a current backlog of one year or more. Additionally, the median backlog remained unchanged at 12 months. Nine out of 10 firms still have at least one opening. The median number of open positions held steady at five.

Future Construction Outlook

Looking to the future, we see future sentiment remains positive on all metrics, although all have declined since last quarter. In general, this is because of economic uncertainty, political environment and uncertainty, and inflation and rising costs.

Future concerns about the impact of inflation remain elevated, with 59% at least somewhat agreeing that they are extremely concerned about the impact of inflation. The perceived likelihood of a recession in the next six months is up three points from the last quarter, but down six points from one year ago. So, we are seeing a bit of a mixed bag, as we look to the future.

Certainly, today’s election is fueling much of this upheaval. We shall see how things shake out in the next few weeks. But one thing is for sure. After the smoke clears from this election cycle, construction companies will still be looking for workers. In fact, 68% predict there will be an increase in hiring in the next 12 months at their firms. Will yours?

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