Issue link: https://construction.trimble.com/en/resources/i/1522174
Executive Summary The first quarter of 2023 looked very similar to the second half of 2022, which saw decreased projects and contract values, which were only modestly offset by hiring and cash flow gains. These similarities were most pronounced in the Q1 2023 new project rate, which decreased 40% when compared to Q1 of 2022—the exact same project decrease seen in Q3 and Q4 of 2022. A substantial portion of the rate decrease came in January, which was a tough month for contractors. However, projects increased 23% in February and March of 2023, potentially indicating that more projects could be on the horizon. In the same vein, contract values decreased 25% in Q1 2023, which isn't too surprising given the decrease in overall projects. What is noteworthy is the impact on heavy highways and civil contractors, as well as with general contractors who both saw substantial decreases in new projects and contract values in Q1. Specialty contractors fared better, which could be due to their reliance on service versus project work. As has been the case for several years, hiring saw modest gains in Q1 across all verticals and most regions as contractors continue to try to build up their workforces. Finding skilled labor remains a challenge for the industry, so more hiring gains are expected; however, declines in projects and contract values may offset any new major growth. The main statistical outlier from 2022 is cash flow. Last year, many contractors decreased their cash flow, which meant they were spending cash on projects, workforces, or maybe even technology upgrades. Cash flow in Q1 seems to be just the opposite, with cash flow increasing 13.5%, particularly by heavy highway and civil contractors, who increased their cash flow by 85%. When mixed with their declines in new projects and contract values, it's clear that heavy highway and civil contractors are feeling the most uncertain of the current economic environment. On the other end of the spectrum, specialty contractors saw a fairly large decrease in cash flow, which aligns with the fact that their project pipeline and contract values were less drastic, so it's not a surprise to see them spending more cash as compared to the other verticals. More insights can be found in the Q1 2023 Quarterly Construction Metric Index, which represents data from the first quarter of 2023, compared to the prior year. 6 Construction Activity Index - Q1 2023 ©Trimble Viewpoint, Inc. All Rights Reserved.