By: Michael Guckes, Senior Economist on October 7th, 2022
Fourth Quarter Starts with Accelerating Planned Construction Spending
ConstructConnect’s Expansion Index is a monthly measure of the dollar value of planned or ‘contemplated construction projects compared to the same month one year ago. The Index geographically covers Canada, the United States, and their respective metropolitan statistical areas.
For the month of October, the national level readings for Canada and the United States were 1.07 and 1.21, respectively. The month’s leading Canadian provinces were New Brunswick followed by Ontario, while in the United States, Idaho reported the greatest expansionary reading followed by Colorado.
Territories at the bottom of the rankings included the Canadian province of Manitoba and the U.S. states of Washington and New Mexico. Lower readings do not necessarily indicate current market weakness as lower readings can be caused by exceptionally high planned construction spending during the comparable year-ago period. In previous months the U.S. states of Texas, Virginia, and Ohio ranked among the top states; in the October results, these states continued to report strong double-digit expansionary readings.
Among the eight major verticals* monitored by ConstructConnect, more than half of all states and Washington, D.C. reported contemplated construction spending growth of 20% or greater in the industrial and medical verticals compared to a year ago. Furthermore, nearly 4 in 10 states reported similar expansion expectations in government and civil planned construction versus year-ago levels.
Verticals reporting weaker readings for the month included commercial and educational. According to the data, nearly one in five U.S. states reported that their level of contemplated planned commercial spending is at least 20% below year-ago anticipated spending levels. Similarly in the educational space, over one-quarter of all states reported some amount of contraction in the dollar value of planned construction projects.
In Canada, more than half of all provinces reported greater than 20% expansion in the community and retail verticals. This was followed by 4 in 10 provinces citing greater than 20% expansion results in residential and government contemplated project spending. Those verticals which signaled challenging conditions included civil and commercial in which more than half of all Canadian provinces reported contracting planned spending of 10% or more. Planned project spending in the educational vertical reported similarly challenging results with almost half of all provinces reporting contraction at or in excess of 20%.
Metropolitan Statistical Area Analysis
At the more granular Metropolitan Statistical Area level, ConstructConnect tracks 23 Canadian and 378 U.S. MSAs. In some instances, a large expansionary reading for a given MSA can result from the introduction of a megaproject to the area or an increase in the number of planned projects at present compared to a year ago. October’s top five MSAs ranked in descending order are as follows:
Within the United States, the proportion of MSAs that reported a 20% or greater increase in planned spending grew significantly compared to both month and year-ago results (see chart below). This was possible thanks to a decline in the number of MSAs reporting an expansion of less than 10% and most importantly, a decline in the number of MSAs reporting modest levels of contracting planned spending.
*ConstructConnect monitors expansion activity data by the following verticals: civil, commercial, community, educational, government, industrial, medical, residential, and retail.
Each month ConstructConnect provides construction activity insights thanks to its suite of proprietary market monitoring products. The results shared in our public reports provide only a small glimpse of the total capabilities of our offerings.
Fortunately, ConstructConnect makes the entire Expansion Index data series publicly available including its cross-sectional analytics that monitors planned construction activity at each combination of market vertical and MSA levels. Users are invited to dive deeper into the data underlying the Expansion Index.
About Michael Guckes, Senior Economist
Michael Guckes is Senior Economist for ConstructConnect. He is an international speaker on the North American construction market. Michael has over a decade of economics-related experience in the construction and manufacturing industries.