USA, CANADA & MEXICO are forecast to see between 2.2% & 2.9% GDP growth in 2023, a slight growth rate increase from previous years.

Construction inflation/escalation in the USA is between  6.1% and 6.4%, Canada is seeing between 5.5% and 5.9% & Mexico is seeing between 7.2% and 8.1%, a 20-year high. This continues to be a problem as we transition into the 2nd half of 2023.

The vast majority of construction bulk materials, such as timber/plywood & OSB, steel products (rebar & structural steel), copper products, roofing, cement, concrete, and plumbing and electrical components have started to decline from their high prices experienced back in the 2nd & 3rd Q of 2022. Some of these bulk construction materials have declined by as much as 25%. Unfortunately, most construction bulk materials and, to some extent, construction-related equipment, such as HVAC components, pumps, and electrical equipment, are still 5% to 15% or more expensive than 12 months ago.

Many US companies continue to hire new employees. We continue to see wage and salary growth and strong investment in capital equipment and new plant construction. This suggests the U.S. economy will likely avoid a major economic downturn/recession in the 2nd half of 2023. Unfortunately, close to 100,000 employees in USA-based tech/IT companies have been let go in large job cuts so far in 2023. Look for this trend to continue in the 2nd half of 2023.

The USA labor market is very strong at this time, with a 3.6% unemployment rate resulting in 5.9 million individuals without work. This extremely low percentage rate has not been seen for more than 40 years. America’s inflation rate is high, at more than 6.2%. Look for this rate to start to moderate in the next 6 months.

 A new nuclear power plant located in Georgia will be operational in May. This is a major milestone for the American nuclear industry that may lead to more nuclear facilities being constructed in the USA in the coming years. The USA currently operates 90 + nuclear reactors that generate as much as 20% of the electrical needs of the country. Nuclear power assists in reducing global warming by providing reliable, clean/carbon-free electricity.

The US industrial construction sector is experiencing a significant growth spurt that could last for the next couple of years; due in part to automobile and computer chip manufacturing companies announcing major capital projects across America. These multi-billion dollar projects include Electric Vehicle (EV) Production Facilities, EV Battery Plants, Advanced semiconductor/computer chip production campuses, and various Call/Data and Fulfillment centers.

Escalating interest/lending rates and the rising construction material costs, together with a scarcity of skilled workers and subcontractors, may be a major challenge and could slow down construction schedules on these new significant capital projects.

The USA Oil & Gas sector will experience minimal growth in the 2nd quarter of 2023. Capital projects include renewable diesel projects, modifying existing facilities to fulfill clean energy/reducing carbon emissions mandates, de-bottlenecking existing production units, and upgrading supporting outside battery limits infrastructure services.

The life science construction sector (Pharmaceuticals/Bio/Medical Devices) continues to be reasonably strong (perhaps somewhat slower than a year back when COVID was rampant), with a number of major capital expansions ongoing or in the pipeline.

Look for a sizable slowdown in the USA’s residential construction sector (single-family homes and apartments). New offices, hotels, retail facilities, and some basic warehouse-type construction projects will also experience reduced growth in the 2nd and 3rd quarters of 2023.

America’s construction labor challenges continue. There is a shortage of skilled construction workers such as electricians, welders, pipefitters, and millwrights. Baby boomers (individuals reaching 55 years of age) are retiring at record numbers. Recent graduates/young workers are not entering the construction industry in the numbers needed to sustain a growing construction sector. These younger workers are attracted to other industries, such as IT, and these other industry sectors look more attractive and less demanding to these individuals.

Canada has experienced a 5% to 7% decline in building permit requests, with a noteworthy decrease in single-family homes and apartment permits influencing this downward trend.

A number of electric vehicle facilities, EV lithium battery, and auto assembly facilities have recently been announced, which should provide an active period for the Canadian industrial construction sector for the next eighteen months.

The Canadian infrastructure, mining, and Oil & Gas construction sectors are experiencing a pick-up as we move into the 2nd half of 2023. Canada’s inflation rate is high at more than 5.7%. Look for this rate to start to moderate in the next 6 months.

In Mexico, Tesla recently announced it will build a major electric vehicle factory on a 4,000-acre facility close to Monterrey. The construction cost is forecast to be in the $5 billion range. Many parts suppliers and vendors will also build facilities close to this new Tesla factory. Mexico’s inflation rate is high at more than 7.6%. Look for this rate to start to moderate in the next 6 months.