Review and Forecast: Prospects Pivot for California Contractors


BY KEN SIMONSON, AGC OF AMERICA CHIEF ECONOMIST


F


ollowing a generally successful year for construction in 2022, the industry is in for major changes in


demand in 2023. Contractors will need to be nimble in order to keep their order books healthy. A reliable sign of how the industry


fared recently is the increase of 38,400 or 4.4% in construction employment statewide from October 2021 to October 2022. Tat brought the total to 919,600, seasonally adjusted. (Seasonal adjust- ment is a statistical method to remove the variations due to routine holiday, weather, and other regularly recurring influences.) Taking a longer view, the October total


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CALIFORNIA CONSTRUCTOR JANUARY/FEBRUARY 2023


was 1.0% higher than in the pre-pandemic peak month of February 2020. (See chart on page 11.) But industry employment in the state still has not topped the all-time high of 945,100 set in June 2006.


Statewide Job Growth Job gains occurred throughout the state. Among the major metros, employment climbed by 16,500 (6.5%) in Los Ange- les-Long Beach-Anaheim; 6,300 (5.1%) in San Francisco-Oakland-Hayward; 3,800 (3.4%) in Riverside-San Bernardino-On- tario; 2,500 (2.9%) in San Diego-Carlsbad; and 1,100 (1.5%) in Sacramento-Ros- eville-Arden-Arcade. All of the smaller metros except Bakersfield also added


construction employees from October 2021 to October 2022. But areas that experienced growth


from new housing, warehouse, and office construction are likely to experience a sharp turnaround once current projects finish. Nationally, housing starts have dropped to 2012 levels, with further de- clines likely. Amazon and retailers alike have been canceling orders for warehouses instead of building new ones at breakneck speed. Similarly, major tech employers have been putting office space up for sublease where recently they were building and leasing in multiple markets.


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