Find out how new housing starts and nonresidential projects will impact chemical manufacturers next year.

John S. Forrester, former Managing Editor

December 8, 2021

2 Min Read
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Representative imageImage courtesy of Vicki Beaver / Alamy Stock Photo

Starts of new homes boomed over the course of the pandemic, but some observers are pointing toward a slowdown in the growth of the residential construction market over the coming year as pandemic-related supply and workforce shortages and other issues linger on, creating some headwinds for chemical manufacturers.

The American Chemistry Council’s (ACC) Year-End 2021 Chemical Industry Situation and Outlook report published Tuesday posits that the number of starts will cool down to 1.56 million in 2022 and in 2023 as well. The industry organization said challenges with labor, land use, housing affordability, and building materials “will curb growth in the short term.”

While growth in new home starts may remain flat for some time, there are some indications that chemical firms may see some opportunities in the commercial and infrastructure construction markets next year.

“The recently approved Infrastructure Investment and Jobs Act, with investments across health care, public safety, and other public infrastructure, as well as increased industrial spending, bodes well for demand for chemical products from the nonresidential construction segment,” professional services firm Deloitte said in its 2022 forecast for the chemicals industry.  

Residential construction project spending dipped in October but spending on private nonresidential projects ticked up by 0.2%, according to data published the month by the ACC. Overall, spending on construction was 8.6% higher last October compared to previous year.

Researchers at Dodge Construction Network found that nonresidential construction starts jumped by 29% this past October.

“Long-term, construction starts should improve, fed by an increase of nonresidential building projects in the planning pipeline and the recent passage of the infrastructure bill,” Richard Branch, chief economist for the construction industry analytics and insights firm, said in a recent report. “Both will provide meaningful support and growth to construction in the years to come. This expectation, however, must be tempered by the significant challenges facing the industry: high prices, shortages of key materials, and the continued scarcity of skilled labor. While healing from the pandemic continues, there’s still a long road back to recovery.”

As the start of the new year approaches, it appears that the chemical companies with a presence in the construction market will have to strike a balance between serving the needs of the static homebuilding market and meeting rising demand from the nonresidential construction segment.

About the Author(s)

John S. Forrester

former Managing Editor, Powder & Bulk Solids

John S. Forrester is the former managing editor of Powder & Bulk Solids.

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