New Jersey announces $350M for school construction

Dive Brief:

• New Jersey Gov. Phil Murphy announced last week $350 million for high-priority capital projects in New Jersey’s school districts, according to a press release.
• Projects eligible for funding include activity around school facilities, capital maintenance and health and safety upgrades. The state will provide school districts with at least 40% of qualified project costs, according to the release.
• In spite of worries over a potential economic slowdown, government spending in 2023 should continue to hold up institutional projectslike education construction, experts say.

Dive Insight:

Economists expect education projects to jump to $72.7 billion in 2023, a 5% gain from 2022 levels of activity, according to Dodge Construction Network.

In New Jersey, as well as other Northeastern states like New York and Massachusetts, the education building stock dates from the 1920s through the 1940s. That will translate to increased renovation and replacement activity in the K-12 building sector this year, despite the weakening population growth of the region, according to Dodge.

Nevertheless, overall construction activity, outside of the top sectorsis beginning to show strain as higher interest rates weigh on the economy.

Material prices remain 7.9% higher than a year ago, while nonresidential input prices jumped 7.6% year over year, according to a recent Associated Builders and Contractors analysis. Though prices did fall in December from the previous month, that decline may in fact indicate spreading economic weakness, said Anirban Basu, ABC chief economist.