Data Digest is re-printed with permission.

Vol. 23, No. 5 February 6-10, 2023

Building ‘momentum’ falls, Dodge reports; union pay raises climb; outlook for renewables is hazy

     The Dodge Momentum Index slid 8.4% in January after 10 consecutive monthly increases but climbed 32% year-over-year (y/y), Dodge Construction Network reported on Tuesday. The index “is a monthly measure of the initial report for nonresidential building projects in planning, shown to lead construction spending for nonresidential buildings by a full year.” The commercial component slumped 11% for the month but was up 40% y/y. The institutional component fell 4.7% for the month but rose 16% y/y. “Weakness in commercial planning in January was broad-based, with office, warehouse, retail, and hotel activity declining. Slower activity in education and amusement projects drove down the institutional portion of the index, nullifying the impact of gains in healthcare and public planning over the month.”

     The “first year of new settlements reached in 2022 for union craft workers in the construction industry had an average increase of 3.8% [for] wages, fringe benefits, and other employer payments,” the Construction Labor Research Council reported on February 3. The average increase jumped from 3.0% in 2021 and was the highest since 2008. Among nine regions, average increases ranged from 5.2% in the Northwest to 3.2% in the West North Central. Among 17 crafts, increases ranged from 4.4% for teamsters to 2.5% for glaziers. The average increase in 2022 for all contract years (including multiyear settlements signed in 2021 or earlier) was 3.1%, compared to 2.9% in 2021.     

     “Developers plan to add 54.5 gigawatts (GW) of new utility-scale electric-generating capacity to the U.S. power grid in 2023, according to our Preliminary Monthly Electric Generator Inventory,” the Energy Information Administration reported on Monday in its “Today in Energy” blog. More than half of this capacity will be solar power (54%), followed by battery storage (17%). “More than $40 billion in wind, solar, and battery projects were announced in three months late last year—as much as the total clean-energy investment for all of 2021, according to the industry group American Clean Power Association,” the Wall Street Journal reported on January 23. However, “the pace of development has ground to a crawl and many renewables plans face an uncertain path to completion. Supply-chain snags, long waits to connect to the grid and challenging regulatory and political environments across the country are contributing to the slowdown, analysts and companies say. New wind installations plunged 77.5% [y/y] in the third quarter of 2022…, according to S&P Global Market Intelligence. New utility-scale solar installations likely fell 40% in 2022 compared with 2021, according to a report from the Solar Energy Industries Association and research firm Wood Mackenzie….Supply-chain and trade issues have complicated planning. Average lead times for securing high-voltage equipment have risen from 30 weeks to more than 70,” said Matt Birchby, president of renewable-project developer and owner Swift Current Energy LLC. “Efforts to create a domestic solar supply chain to meet U.S. project demand are expected to take a few years….The wind industry has struggled to overcome pandemic-related supply-chain and logistics challenges in delivering its massive equipment, but uncertainty over the details of federal tax policy has been a significant factor slowing installations. Companies are waiting on Treasury Department guidance to outline the specifics of how a project can qualify for tax credits in the Inflation Reduction Act. Even in battery storage, an industry which saw more installations in 2022, supply-chain problems have slowed some construction plans by as much as a year, developers say….Interconnection wait times rose to about 3.7 years for projects delivered between 2011 and 2021, up from around 2.1 years for projects built in the decade prior, according to a study last year by Lawrence Berkeley National Laboratory. Just 23% of the power-generation projects seeking grid connection from 2000 to 2016 were ultimately built. Completion rates were even lower for wind, at 20%, and solar at 16%.”
     The Census Bureau posted a notice today reminding firms to complete the Economic Census forms by March 15 if they were asked to participate. The Census of Construction and other economic censuses are used by policymakers, economic development officials, market researchers, and others to gauge the importance of construction in local and state economies and to track the inputs used in establishing producer price indexes and the impacts of construction spending.

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Editor:, Chief Economist, AGC. Go here for Ken’s PPT or more construction data.
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