Broad Measures of Supply Chain Improvements Mask Specific Problems Across Nation
Despite the recent improvement of supply chain performance, specific supply chain problems continue to frustrate specific areas and regions.
Construction Economics Brief - July 2023
Michael Guckes, Chief Economist
Jul 21, 2023
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.
Highlights from July 2023 release include:
- The latest data from trackers of construction material prices are pointing to a 4% - 6% year-on-year decline. This decline may, in part, explain a concurrent slowing in the rise of final bid prices for construction work.
- Supply chain performance has improved significantly since the third quarter of 2022. Current measures of supply chain performance reflect a system with greater free capacity, faster performance times, and lower prices. This has helped to build a worrying surge in inventories relative to sales.
Summary:
As supply chains continue to trend towards pre-COVID conditions, U.S. firms that have been holding excessive inventories will now find themselves at a cost disadvantage relative to those who have more quickly turned back towards the use of a just-in-time (JIT) inventory strategy. The advantage is two-fold, as JIT firms are not only buying materials for less but also avoiding inventory carrying costs.