Construction Sector Sees Backlogs and Year-Over-Year Declines: Kiplinger Economic Forecasts

Commercial and industrial projects are affected by red tape delays and a skilled labor shortage.

An older construction worker mentors a younger worker on a construction site.
(Image credit: Getty Images)

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Construction forecast. One way to measure the impact of the recent federal infrastructure bill: construction backlogs. In June, they held steady at 8.9 months, the same as in May. This refers to projects contractors have booked but haven’t yet started. In June, the backlog of infrastructure projects increased for the third straight month. It’s at its highest level in two years, due partly to a big rise in clean-energy projects. 

Meanwhile, the other major construction categories, commercial and heavy industrial, are seeing both monthly and year-over-year declines as the economy gradually slows. Reasons for the logjam: government red tape, such as required permits and federal approvals, and an industrywide shortage of skilled construction labor.

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Regulatory changes. Regulators are clarifying personal protective equipment requirements for the construction industry, after years of lobbying by labor groups and by the Occupational Safety and Health Administration's (OSHA) internal advisory committees. Changes will focus primarily on ensuring that PPE fits workers properly. 

OSHA currently requires construction employers to provide workers with PPE that is high-quality. But the agency does not require the PPE to fit properly, which can make it ineffective or make loose-fitting vests snag, among other risks. The rule change will affect around 10% of the construction workforce. There are costs to transition, but PPE cost differences based on size are minimal.

This forecast first appeared in The Kiplinger Letter, which has been running since 1923 and is a collection of concise weekly forecasts on business and economic trends, as well as what to expect from Washington, to help you understand what’s coming up to make the most of your investments and your money. Subscribe to The Kiplinger Letter.

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Matthew Housiaux
Reporter, The Kiplinger Letter
Housiaux covers the White House and state and local government for The Kiplinger Letter. Before joining Kiplinger in June 2016, he lived in Sioux Falls, SD, where he was the forum editor of Augustana University's student newspaper, the Mirror. He also contributed stories to the Borgen Project, a Seattle-based nonprofit focused on raising awareness of global poverty. He earned a B.A. in history and journalism from Augustana University.