Construction Economic News

Data for the week ending September 2nd reported declining levels of delayed, on hold and abandoned projects. All three measures of project stress remain near or below comparable levels of the last two years. Historically the third quarter marks the seasonal apex in on hold and abandoned project levels. Additionally, this year’s financial markets dynamics continue to generate headwinds for construction developers and owners as banks continue to employ austere lending practices. For these reasons September’s results should be followed particularly closely.

This year, the jobs market has frequently been cited as a cause for economic optimism; however, recent jobs data suggest this most important pillar of the economy may be faltering.

Data for the week ending August 26th continues to signal that the transition of nonresidential and civil projects from concept to physical completion remains high. All three measures of project stress remain at or below comparable levels of recent years. Historically the third quarter of each year marks the seasonal apex in on hold and abandoned project levels; however, this year’s results are thus far on track to be their lowest since 2020. These encouraging results have come notwithstanding the headwinds caused by an eroding credit market for construction developers and owners.

Data released for the week ending August 19th provided further evidence of a strong construction industry as fewer projects reported faltering in their transition from concept to physical completion. All three measures of project stress declined in the latest weekly results. Historically the third quarter of the year marks the seasonal apex in on hold and abandoned project levels; however, 2023 levels thus far are on track to be their lowest since 2020. These encouraging results have come notwithstanding the rising precariousness of financial markets.

It Starts with Government Spending Public spending and infrastructure have a long and extensive relationship. The Public Works Administration, part of the New Deal in 1933 and a response to the Great Depression of 1928, formalized the modern-day large-scale public works that have changed America for the better. Every day, Americans enjoy arguably the world’s largest public works project in recorded history when they use the Interstate Highway System.

Stress readings in the week ending August 12th provided further encouraging news for the industry. Delayed and On hold project levels both fell during the latest week. Historically the third quarter of the year marks the seasonal apex in on hold and abandoned project levels; however, 2023 levels thus far are on track to be their lowest since 2020. These encouraging results have come notwithstanding rising bank standards for CRE loans and higher financing costs.

The Construction Economics Brief, produced by ConstructConnect’s economics team, is a monthly video series whose aim is to provide the latest and most pertinent economic information to construction industry leaders in a concise video format.

Challenging economic conditions in China will have ramifications for U.S. prices, and certainly within the construction industry. In its latest GDP data release, China’s economy grew at an annualized rate of 6.3%, marking one of the slowest pre-COVID-19 growth readings since at least the 1990s.

On July 26, the Federal Reserve increased the benchmark Fed Funds Rate (FFR) to 5.25%, marking the 11th consecutive time that the Fed has raised rates since early 2022. Never in history has the Fed raised the FFR this aggressively. As the Fed increases the FFR, it indirectly raises the cost of borrowing for public and private borrowers. This benchmark, which influences the rate of all other U.S. debt products, is presently at its highest level in more than 22 years.

The Construction Economics Brief, produced by ConstructConnect’s economics team, is a monthly video series whose aim is to provide the latest and most pertinent economic information to construction industry leaders in a concise video format.