Article source: ConstructConnect
2022 snapshot
US construction starts grew 16.7% in 2022 to $912 billion. A record value for mega-projects (projects valued above $1 billion) was posted in 2022 with 31 such projects started for a total value of $105.3 billion. Non-residential building starts grew 36.7%, driven by new factory building. Civil engineering starts grew 26.9% in 2022 with all sectors expanding except for the miscellaneous civil engineering sector. New residential construction, by contrast, fell 2.2%. On a regional basis, new construction grew in all four major regions, led by construction in the South.
Canadian construction starts declined 12.1% in 2022 to C$89.6 billion. New construction for residential building, non-residential building, and civil engineering all declined at a similar pace of 12.2%, 13.9%, and 9.5% respectively. There were large divergences in growth across the non-residential and civil engineering sectors, and unlike in the US, growth dynamics were not driven by mega-projects.
U.S. year in review
US GDP had a slow start to the year, contracting in each of the first two quarters. However, the composition of growth was less worrying as inventory destocking contributed to the negative reads early in the year. Economic growth rebounded in each of Q3 and Q4 with full-year growth in 2022 coming in at 2.1%. High inflation—with the consumer price index (CPI) peaking at 9.1% year-on-year (y/y) in June—was a major theme in 2022. While CPI inflation has eased back since then, ending the year at 6.5% y/y, it remains considerably above the Federal Reserve’s 2% target. In March, the Fed raised its benchmark interest rate by 25 basis points (bps), beginning a series of aggressive rate hikes. This was followed by a 50bps increase in May, then four successive 75bps increases in June, July, September, and November, before a final 50bps rise in December. The policy rate ended the year in a range of 4.25-4.5%, and the Fed increased its rate a further 25bps at its meeting in February 2023. Higher interest rates have fed through to 30-year fixed mortgage rates, which peaked above 7% in November.
