Construction Economic News

Where are we on the recession watch? In a nutshell, the flow of events is confusing. There are certainly reasons to suspect slower economic times are heading our way, and the difficulties that have arisen in the banking sector have done nothing to lighten the mood. Although, in a strange and unexpected twist, financial sector turmoil may be serving a beneficial purpose by causing the Fed to become more restrained in its interest rate tightening measures.

Today, the Federal Reserve has chosen the middle path in raising its policy-setting interest rate by 25 basis points (where 100 basis points = 1.00). The target range for the federal funds rate is now 4.75% to 5.00%.

Much of Canadian construction activity is tied to the extraction (or harvesting) of the nation’s resources. Canada has such an abundance of resources that, with respect to most commodities, domestic demand can be readily satisfied, leaving a great deal of scope for export sales. The difference between big export dollar volumes and low import dollar volumes makes a significant contribution to gross domestic product.

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

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

No Longer Just About Megas ConstructConnect announced today that February 2023’s volume of construction starts, excluding residential work, was $33.0 billion, a decrease of -42.4% versus January 2023’s figure of $57.2 billion (originally reported as $57.0 billion).

The March release of ConstructConnect’s Expansion Index registered another month of impressive gains for the construction industry across both the United States and Canada. At the national level, the U.S. index result reported a sequential month of strong double-digit gains, while Canada’s reading posted a six-month high.

At +311,000, the U.S. number on net jobs creation in February, as calculated by the Bureau of Labor Statistics, was okay. It was neither truly exciting nor in any way disturbing. It was down from the +504,000 performance in January, but it wasn’t the kind of figure that would signal a recession has arrived on everyone’s doorstep. And that’s what we’re all watching for, indications of slowdown in the economy that might take it into negative real (i.e., inflation-adjusted) GDP change territory. That’s not what was delivered in February’s jobs report.

Since the spring of last year, monthly total U.S. housing starts (annualized) have been on a downward trajectory. The weakness in housing starts is one of the chief arguments for speculation that a recession is just around the corner.

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