The U.S. construction sector continued to face challenges during the first half of 2023 due to an economic slowdown, rising interest rates, elevated materials costs, the ongoing labor shortage and tighter lending standards. While the nonbuilding construction segment showed strength as a result of federal investment in infrastructure projects, residential construction activity continued to fall and nonresidential construction activity began to decline. Due to this environment, merger and acquisition (“M&A”) activity in the construction sector slowed. Nonetheless, analysts anticipate that, as the year progresses, more clarity should emerge regarding the direction of the economy. If conditions stabilize, analysts are cautiously optimistic that normal levels of both starts and M&A activity could return to the construction sector before the year’s end.
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