Construction Economics Brief - July 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.