CONSTRUCTION OUTLOOK: RECESSION OR RESURGENCE?

By Ken Simonson Chief Economist AGC of America

The construction industry in Georgia, following a strong rebound from the initial setbacks caused by the pandemic, appears to be in transition. Nonresidential activity is picking up on several fronts, while residential construction and interest-rate sensitive segments face a slowdown that could turn into a slump.

The pandemic was not as devastating for construction employment in Georgia as it was in much of the nation. Seasonally adjusted construction employment in the Peach State decreased by less than 6% between February and April 2020, less than half as steep a decline as the national drop off. (Seasonal adjustment is a statistical technique to remove the influence of regularly occurring weather or holiday patterns.) And, Georgia had regained all of the lost jobs by late 2021, unlike many states. However, employment tailed off in early 2022. The industry fell back below the pre-pandemic high point between January and April, shedding 6,200 positions, with little net change since then.

The situation varies around the state. In the Atlanta-Sandy Springs-Roswell metro area, which accounts for about two-thirds of the state’s construction jobs, as well as Savannah, industry employment has consistently matched or topped year-earlier levels. In contrast, the state’s second-largest market for construction, the Augusta metro area, has experienced an 8% decline in construction employment in the past three years.

Although there is no public state-level data that tracks construction activity by project type, Georgia appears to be faring well. The state has snagged two major electric vehicle plants that will generate additional projects. The port of Savannah continues to expand and add related warehouse and transportation investments. Georgia’s population growth rate of 0.7% from July 2020 to July 2021 greatly outpaced the U.S. rate of 0.1%, promising more demand for housing, schools, and other structures.

As others do around the nation, Georgia contractors face multiple challenges. The cost of materials and services used in construction rose much faster, until recently, than contractors’ bid prices, putting huge pressure on profit margins. While some materials, such as lumber, steel, and copper products, have recently declined in price, prices have continued to rise for other items, including gypsum, glass, and concrete products. Shortages and allocations remain troublesome.

Finding enough qualified workers has been an even bigger problem for many firms. In July, the U.S. unemployment rate for jobseekers with construction experience was 3.5%, close to an all-time low. The situation is even more acute in Georgia, where the all-industry unemployment rate hit a record low of 2.9% in July.

In short, the outlook for construction – in Georgia even more than nationally – remains positive overall. But not all types of construction or locations will thrive in the next year. And contractors with projects aplenty will have to price them carefully and work hard to find and keep the employees they’ll need.

The AGC Georgia team is excited to offer a variety of opportunities for members to get engaged, grow their professional expertise, learn and share best practices, and give back to the community.

While final details are still being planned for some of the below opportunities, thus they aren’t open for registration, a majority of these events and learning opportunities have more details available on our website under the Calendar at www.agcga.org.

If you need more details, please connect with a team member by calling 678-298-4100.

Note: V = virtual; H = hybrid.

October 3