Construction Economic News

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

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

A New Milestone for Megas ConstructConnect announced today that June 2023’s volume of construction starts, excluding residential work, was $63.2 billion, an increase of +25.5% versus May 2023’s figure of $50.3 billion (originally reported as $49.2 billion).

So far, minimally deterred by the Federal Reserve’s interest rate hikes, the unemployment rate in the United States has stayed near rock bottom. Seasonally adjusted (SA), it’s been less than 4.0% for 15 months in a row, indicative of a labor market that’s about as tight as it has ever been.

Joy was expressed by economic commentators when the Bureau of Labor Statistics reported May’s year-over-year change in the headline Producer Price Index to be a mere +1.2%. As Graph 1 illustrates, there’s a close correlation between changes in the Consumer Price Index (i.e., inflation) and changes in the top-level PPI number.

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

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

A Splash of Cooler Water ConstructConnect announced today that May 2023’s volume of construction starts, excluding residential work, was $49.2 billion, an increase of +4.3% versus April 2023’s figure of $47.1 billion (originally reported as $47.0 billion).

It’s as if they knew. The Bank of Canada just raised its key policy-setting interest rate, the ‘overnight rate’, by 25 basis points (where 100 bps = 1.00%) to 4.75%. This was in the belief that the Canadian economy is continuing to run too hot. 2023’s Q1 real (inflation-adjusted) gross domestic product growth annualized was +3.1%, an above-average result. (The annual change in Canada’s GDP over the first 22 years of this century has been +2.1%.)

Neither the U.S. nor Canadian economies have slowed enough to fully satisfy the central bankers in either country. Also, inflation rates in both nations might be half what they were at their peaks, but they are still viewed as being too rapid, and, therefore, some further interest rate hikes can’t be ruled out.