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Construction to avoid hard-landing recession

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Arcadis: Construction is to Avoid a Hard-Landing Recession

Leading cost advisor Arcadis is issuing a warning that the current market cycle has peaked as the effects of record increases in energy prices become apparent. But according to the business, the impending slowdown won’t “blow out” like the catastrophe of 2008–2012. As the demand side proves more resilient than in the past, the industry is more likely to undergo a prolonged but shallow slump than a hard landing in the face of the current economic challenges.

Arcadis cautions that the overall picture of inflationary pressure shows no signs of diminishing, with material price hikes continuing to be the main driver in its Autumn market and tender forecast, entitled “Energy Sapping.”

Even with government support to maintain prices at current levels, spiraling energy costs threaten price stability. They are expected to have an impact on the price of producing basic materials and their availability.

This means that the high inflation of the first half of 2022 will remain fixed, according to Arcadis. The cost-of-living crisis will continue to put pressure on labor costs to rise, which will feed calls for catch-up compensation through 2023 and beyond. With overall construction orders declining 10.45% in Q2 over the prior three months, the most significant quarterly decline since Q4 2020, these stresses are beginning to manifest.

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