The Private Market and Economic Outlook – October 2022

October 7, 2022

The Private Market and Economic Outlook – October 2022

The latest Construction Put in Place numbers were released by the U.S. Census Bureau on October 3, 2022, covering data design and construction spending for both private and public sectors. For August 2022, total design and construction spending was up year-over-year by 8.5%, compared to the same month last year.  Private residential spending continues to be up by 12.5%, private non-residential is up 5.5% and public spending is up 3.3% (based on seasonally adjusted data)

Also, in August (based on not seasonally adjusted data) a new sector joined the top five hottest markets, water supply, up 12.8% in year-over-year growth from August 2021 to August 2022.  On the other hand, the power market joined the bottom five coolest markets, down 7.8%, year-over-year by percentage growth.

Water infrastructure has accelerated in recent years due to aging infrastructure and new funding. The Infrastructure Investment and Jobs Act (IIJA) will provide $55 billion in funding toward clean drinking water including replacing all lead ?pipes and services lines. According to the US ?Environmental Protection Agency (EPA) and McKinsey “water-pipe replacement rates will peak in 2035 at 16,000 to 20,000 miles of pipes replaced per year-four times the current annual replacement rate.” Therefore, this sector will continue to see growth over the long term.

According to the International Energy Association, (IEA) “renewable power generation is growing faster than overall demand in 2022, leading to’ a ‘slight decline in’ the ‘global power sector.” There were unprecedented energy demands during the COVID years, and the market is finally returning to normal growth patterns. Therefore, the dip is not indicative of the future performance of the market just a slowing as economic growth decelerates.

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