Construction Economic News

Once again, there was no dramatically negative change in the U.S. labor market statistics contained in the latest monthly Employment Situation report from the Bureau of Labor Statistics. Quite the opposite. In April, the total number of jobs in the economy rose by +253,000 and the seasonally adjusted unemployment rate stayed extremely low, at 3.4%.

What’s that you say? There’s a bull stock market underway! Yes, indeed, and it seems hard to believe, given that we were talking about bear market conditions only a few months ago. A bull is a gain of +20% or more in an index from its 52-week low and a bear is a drop of -20% or more from its 52-week high.

Much of my work-related conversation over the past year-plus has concerned the preponderance of mega-sized construction projects being green-lighted in the United States. A megaproject is defined as a project carrying an estimated value of a billion dollars or more.

The accompanying table records the top 10 project starts in the United States for March 2023.

Clichés are often true and it is the case that a picture can be worth a thousand words.

Continuing Support from Megas and Semi-Megas ConstructConnect announced today that March 2023’s volume of construction starts, excluding residential work, was $47.6 billion, an increase of +45.0% versus February 2023’s figure of $32.8 billion (originally reported as $33.0 billion).

During March just passed, the DJI 30 index moved +1.9%; the S&P 500, +3.5%; and NASDAQ, +6.7%. The TSX stayed more or less flat, -0.6%. Only the Russell 2000, which reflects equity price movements for the 2,000 smallest publicly traded companies, was hesitant about putting a brighter face on things, backtracking -5.0% (Table 1).

There’s a shorthand way of looking at some of the key implications for the construction industry from the major push underway everywhere to reduce carbon emissions. It’s to consider how fossil fuels are used in production processes currently and what the opportunities are for their replacement by nonpolluting substitutes.

As a companion piece to ConstructConnect’s recent article on movements in U.S. construction material costs, today’s story will look at what’s been happening in Canada. Similar to America, Canada has seen moderation in prices for some individual construction inputs. On the whole, though, the Canadian easing has perhaps not been as extensive. Table 1 seems to support that assertion.

In 2021 and continuing into early 2022, construction material costs, with the pandemic in full swing and interest rates effectively zero, shot up on a year-over-year basis like never before (see Graph 1). Contractors were largely caught by surprise and did not feel they could raise their bid prices right away. Individually, they were worried about winning contracts and surviving.