Construction Economic News

ConstructConnect Releases 2024 January Construction Starts Data

Economic highlights from the United States and Canadian construction markets, in partnership with Oxford Economics

Stronger economic outlook pushes up forecast by 1.7 percentage points

COMPOSITE OVERVIEW: The PSI gave back slightly more than half of its gains from the prior week, falling 9.3% for the week ending February 3rd, 2024, to close at 142.0. The absolute count of projects that experienced a delayed bid date, hold, or abandonment all increased from the prior week, however, due to seasonal adjustment factors, the composite fell for the week. The first full month of data for 2024 has been particularly difficult for the industry when compared to previous years. The first four weeks of 2024 experienced 85% and 56% more abandoned projects compared to the same 4-week period in 2023 and 2022 respectively. Such extreme gains have thus far been limited to abandoned project activity. By comparison, similar 1- and 2-year look backs for delayed bid date and on hold project counts reveal increases of 10% or less. These latest results are but a continuation of a picture that first began in September of 2023 when indexed abandoned activity readings initially pulled away from the other components of the index. Never in recorded history has abandoned activity been the leading driver of the Project Stress Index for 4-months or longer.

COMPOSITE OVERVIEW: The PSI surged by 19.5% in the week ending January 27th, 2024 to close at 156.6. The week’s severe increase was the result of surging project abandonments coupled with elevated levels of projects that have experienced either a delayed bid date or have been put on hold. The last time that abandoned activity was of such a magnitude was in late-April of 2020 as the COVID pandemic began shutting down the global economy. Unfortunately, the latest results only magnify the recent saw-tooth pattern observed in the data since late-October. Given that current macroeconomic conditions are improving thanks to slowing inflation, falling bond rates, and easing lending standards, multiple factors are now working in favor of owners and developers. As such it is doubtful that recent readings can be sustained. Rather, the surge in abandoned projects early this year may merely be a lagged response to the financial stresses experienced during 2023. The economics team at ConstructConnect will continue to carefully monitor stress conditions over the coming weeks.