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Five Things You Must Know About the Economy Right Now
Michael Guckes, Sr. Economist, ConstructConnect
The construction industry is dealing with supply chain disruptions, inflation, and an ongoing labor shortage. The threat of recession remains. Here are five things contractors and building product manufacturers can do to navigate the construction economy with confidence. Download infographic (pdf)
Changing Demand Patterns
Demand for goods and services fluctuates in unpredictable ways. Diversifying product and service offerings and markets served give a company a better chance of surviving an economic downturn.
PRO TIP: Make informed decisions with data-driven insights to land the best projects.
Watching Your Customers’ Customers
While the business cycle impacts virtually all businesses, the timing of its impact can vary between industries.
PRO TIP: The best companies don’t simply monitor their customers, but their customers’ customers.
Risk of Project Cancellations and Delays
During the last recession, many construction firms saw backlogs of nine to 12 months slowly disappear as projects were put on hold or canceled because no one could get financing.
PRO TIP: Now is the time to start strategizing how you'll keep work coming in should things get tight.
Supplies Relative to Sales
When contractors fail to realize an economic slowdown or contraction, this can result in a sudden surge of canceled or unwanted product orders. This can create a destructive ripple effect through the supply chain that broadly impacts the entire industry.
PRO TIP: Leverage construction market insights and inventory-to-sales data when business cycles are shifting.
Navigating Inflation and Rising Costs
In mid-2022, overall inflation stood at 9%, a 40-year high following more than a decade of historically low inflation rates. For most business leaders, the current inflation situation is forcing them to use forward-looking data while being mindful of the influence of inflation.
PRO TIP: Be sure to give greater attention to inflation-adjusted data or monitor data provided in non-dollar terms.
ConstructConnect delivers market-leading software solutions for trade contractors, general contractors, and building product manufacturers to uncover more project opportunities, build competitive advantage, strengthen stakeholder relationships, and optimize data-driven decision-making. Call Us at 877-794-8056
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