The COVID-19 pandemic has continued to hit all markets hard, but especially the aggregate market and construction industry. In 2021, we summarized the market for the first two quarters and predicted how the third and fourth quarters would turn out. While COVID remains a constant factor in the fluctuation of the supply chain and global markets, industry experts are optimistic that the changing economy and less pandemic restrictions will contribute to immense growth throughout 2022.
Quarter 1 Summary
According to a news release published by ABC in December 2021, U.S. construction had only recovered about 90% of the jobs that were lost earlier in the pandemic. This number continues to remain pretty static, especially with a lot of workers retiring or deciding to pursue more remote-based jobs. However, the Associated General Contractors of America (AGC) has shown rising interest in jobs and positive statistics, so Quarter 1 has overall been successful, especially when compared to 2020 or 2021.
In Texas specifically, the Texas Department of Transportation has a list of priorities over the next decade, one of which is the Buffalo Gap Road project. This project was slated to begin at the beginning of the first quarter and is expected to last two years. In addition, the I-35 project that began in 2021 has remained a priority this year.
Quarter 2 Summary & Predictions
As we’re in the middle of Quarter 2, we are in a unique position of seeing how far we’ve already come while also looking to the future. Even though business is booming in the Texan construction industry, contractors continue to have difficulty hiring new teams. There have also been higher prices for materials like lumber, copper, steel, aluminum, and concrete, as well as transportation for products. In addition, supply chain issues, particularly with trucking, will continue to be present, but they are not as prevalent as they were a year ago.
While continued issues may cause some projects to be delayed or cancelled, there is overall a positive outlook for the rest of 2022 and the years to come. 2022 has already been a busy year for the construction industry, perhaps due to the fact that increasing construction projects could prove essential to helping the economy recover. From late 2021, ABC’s Construction Backlog Indicator was 8.4 months in November, leaving plenty of projects for the construction industry to tackle this year.
Quarter 3 Predictions
In the second half of 2022, supply chain issues are expected to significantly improve, allowing constructions projects to get back on a more stable track. Some national initiatives to improve the supply chain were put in motion, or at least discussed, back in 2021. For example, some proposed ideas were implementing a tariff relief for construction materials and waiving hours-of-service rules to help better manage freight backlogs. As the state and national economies continue to improve, we can look forward to about a 6% increase in construction starts compared to 2021.
Quarter 4 Predictions
Looking to the last quarter of 2022, transportation projects take the lead. The Infrastructure Investment and Jobs Act (IIJA) that was passed in November 2021 includes over $35 billion in funding for projects in Texas over the course of the next five years, and the main focus is on repairing highways and bridges. Other plans include transportation safety programs, public transportation, airports, and EV charging ports.
In addition, the residential and commercial industry in particular is sure to stay healthy after showing an increase in 2021, especially in major cities like San Antonio, Austin, Houston, and Fort Worth. There is a rising demand for stone in residential and commercial projects, allowing the aggregate market to flourish. There is also a strong demand for housing and development, and this demand will continue to grow as construction companies recover from COVID and expand operations. Almost 900,000 square feet of new office space is planned for this year, and over 4.9 million square feet of industrial projects are also expected in the future. 2 million square feet of projects should be completed by the end of 2022.
In 2021, U.S. economic growth slowed across the board, and the supply chain still struggled to recover from the difficulties of the beginning of the pandemic. 2022 is looking more optimistic economically, but in particular within the construction industry. While most construction projects in Texas have not yet reached completion, there are many plans in place for the building of bridges, roads, schools, and residential and commercial sites, which bode well for growth throughout the rest of the year.
While there are still many unknown factors about the pandemic and how it could impact construction growth in the future, the statistics and general economy point to recovery at the state, national, and global levels. By 2030, the construction industry is predicted to reach $15.2 trillion, which is a 42% increase from 2020. All in all, we should see some positive effects that result from the flourishing Texas aggregate market. These include more jobs, lower vacancy rates in residential and office buildings, and rent growth. With the market already booming and the supply chain working toward recovery, we should see continued positive statistics for the rest of 2022.