Construction activities have increased, but experts warn that interest rates, inflation, and recession risks will impact construction in the near and long term. Supply shortages have eased up, as have gas prices. What should we expect for the construction industry?
Inflation and Rising Prices Impact Construction
The cost of doing business, gas prices, and the cost of living are still high. As a result, many construction companies see slow decision-making.
Let’s consider how rebuilding after Hurricane Ian’s destruction will be impacted by inflation. “If the hurricane had hit two months or three months earlier, it would have been so much worse than now,” one construction worker said to NBC news.
Obviously, it’s an insufficient balm after so much loss, but rising building material costs have slowed down. Lumber prices have returned to pre-pandemic levels. PVC and copper are also reversing. However, the massive rebuilding that needs to be done could increase prices with the demand.
Recession Risk Impacts Construction
Some experts warn that a recession is looming. However, infrastructure construction is less impacted by recession than home builders are. Infrastructure is just that; it supports all other economic activities. Therefore, investment in infrastructure will still be substantial even in tough economic times.
How infrastructure projects are chosen and funded does change based on current needs, but done well, infrastructure investment can minimize recessions by acting as a fiscal stimulus. For example, if we improve transportation or broadband systems collectively, that improves the economy.
Well-thought-out long-term infrastructure impacts our lifestyle for generations. The systems we create affect where people choose to live, how they travel, and even how economic and other changes impact an area.
What is Elexco Doing?
How do we plan for the future and mitigate risk? At Elexco, we do what we do best. Yes, we keep learning and growing, but we stick to the services we know we’re highly skilled at and keep delivering quality. Ensuring our customers are happy ensures we are the go-to company for generations to come.
Our project managers continually monitor the financial health of projects to ensure profitability while ensuring our customers get what they need.
Elexco also knows that cash is king. As profit margins squeeze, we ensure our debt-to-income ratio is reasonable and that we have enough liquid assets to sustain any financial turmoil that may come our way.
We’re here for the long haul. In fact, we’re poised for even more growth. Our team is always looking to add qualified individuals to our team. See what positions we’re looking for here.
Resources/Citations
https://www.brookings.edu/opinions/wise-infrastructure-investments-can-stabilize-the-economy-and-reduce-climate-risk/
