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Read this article to understand the level of U.S. non-residential construction projects that have been delayed, on hold, or abandoned.
COMPOSITE OVERVIEW
The Project Stress Index composite finished the month of June 2024 at 112.7, up 1.5% from the prior month’s reading and up 9.0% from the same month a year ago.
Since shifting lower in mid-May, weekly and monthly readings have hovered around 110 to 113. This range indicates that current levels of project stress are only slightly more than 10% above the average level recorded during the 2021 calendar year.
The most recent readings also mark the PSI's lowest point since its last surge began in early September 2023.
Since the Federal Reserve began raising interest rates in early 2022, the PSI has observed four cycles, including four associated “low” points (July 2022, January 2023, August 2023, and May 2024).
Each of the first three low readings was short-lived, as evidenced by their “V” shape and quick rebounds. Additionally, each previous low was led by a sharp but brief decline in abandonment activity.
However, the latest lull has been sustained by falling on-hold and bid-date delayed activity. Collectively, these stress types make up over 90% of all projects that face a stress event by project count. Thus, despite abandonment activity remaining 25% above 2021 baseline levels, the industry is currently seeing one of its best sustained periods since early 2022.
COMPONENTS MONITOR
| Delay Bid Date | On Hold | Abandoned |
|---|---|---|
 |
 |
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(Month-on-month changes of less than 0.25% are indicated as unchanged)
Sector Status Update
Due to their disparate financing sources, public and private projects often exhibit distinct stress trends. As stated above, on-hold and bid-date delayed projects have allowed the Index to reach and sustain some of the lowest readings recorded since the Fed began raising interest rates in early 2022.
The recent decline in bid date delayed projects has been particularly pronounced among private sector projects. June 2024’s count of such projects marks the lowest June reading since at least 2021 and is 40% below June 2023’s level.
However, the latest decline in projects placed on hold is almost exclusively thanks to the public sector, where the latest month’s reading was also the lowest among any June since 2021. In contrast, year-to-date private sector on-hold activity remains at or near record highs.
About the Project Stress Index
The Project Stress Index (PSI) composite represents an equal-weight measure of the seasonally adjusted level of pre-construction projects that have experienced a delayed bid date, have been placed on hold, or have been abandoned in the last 30-days.
The PSI monitors nonresidential and multifamily projects in their preconstruction phases only and thus excludes any single-family home construction. Each component has been seasonally adjusted and then indexed against its 2021 average weekly reading. The independent tracking of each status type gives unique insights into the timing, direction, and amplitude of market changes.
Additional information about the PSI, including detailed data about the individual readings for delayed, on hold, and abandoned projects can be found here.
