Construction Economic News

The recent history of global energy price movements is unprecedented. Not since at least World War II have energy firms, or their customers, experienced the severity and frequency of price shocks that have occurred as a result of COVID-19 and, more recently, the war in Ukraine.

The economics team at ConstructConnect frequently emphasizes the importance that geography and market verticals have on the future prospects of any construction firm. Freely available data from our Expansion Index makes it possible for any construction business owner with a computer to view for themselves the expected divergence in anticipated construction spending by metropolitan statistical area (MSA) and market vertical. ConstructConnect Insight allows users to see not only historical construction spending by MSA and vertical, but forecast expectations as well.

After surging to notable peaks of $1,400 per contract in May 2021 and a similarly impressive $1,300 in February 2022, the continuous contract prices for Random Length Lumber are currently in search of a market floor. As of May 15, 2023, prices had plummeted to $344, marking a three-year low that was only slightly surpassed by the knee-jerk collapse in prices during the initial weeks of the COVID-19 pandemic. Prior to the disruption caused by the pandemic, lumber prices had traded within a narrow range of $390 to $440 per contract.

When it comes to determining the interest rate that a company must pay to borrow capital, everything is relative. The interest rate that the safest, or least risky, borrowers are charged to borrow is often called the risk-free rate.

Among the real estate firms listed on the Standard and Poor’s 500 Index, earnings per share in Q4 2022 stood at $1.21, reflecting a significant decline of 46% and 49% compared to the levels recorded one quarter and one year ago, respectively. Certainly, 2022’s rising interest rate environment was a significant headwind as the sector is highly dependent on floating interest rates which during the past year rose at their fast rate in history.

Earlier this year ConstructConnect began publishing the Project Stress Index, a proprietary resource tracking the weekly level of projects failing to move towards expected completion.

On May 10, 2023, the Bureau of Labor Statistics released its latest Consumer Price Index data. The release’s broadest measure of prices, the All Items reading, marked its 10th consecutive month in which year-on-year inflation slowed.

Earlier this year ConstructConnect began publishing the Project Stress Index, a proprietary resource that tracks the weekly level of projects failing to move towards expected completion. The strength of the Project Stress Index resides in its ability to monitor the weekly level of projects that have had their bid date delayed, have been put on hold, or have been abandoned.

Earlier this year ConstructConnect began publishing a new data product named the Project Stress Index. The strength of the PSI resides in its ability to monitor the weekly level of projects that have had their bid date delayed, have been put on hold, or have been abandoned. The independent rise and fall in the level of projects experiencing each type of event, along with their interdependent behavior, may better allow market watchers to distinguish normal market volatility from actual turns in the market.

As the banking industry reels from some of the largest bank failures in history, many banks—and in particular regional banks—have quickly tightened their lending standards for fear of making loans that may one day sour. This means that many quality construction firms with good credit histories are being denied loans that they would have received just a year ago.