Construction Economic News
Much Will Depend on Y/Y Comparison of Megaprojects ConstructConnect announced today that April 2023’s volume of construction starts, excluding residential work, was $47.0 billion, a decrease of -2.1% versus March 2023’s figure of $48.0 billion (originally reported as $47.6 billion).
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.
Similar to what has been occurring in the United States, labor market conditions in Canada have remained robust despite significant hikes in interest rates orchestrated by the nation’s central bank. April’s nationwide total jobs count north of the border rose by +41,000 according to the latest Labour Force Survey conducted by Statistics Canada.
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.
Once again, there was no dramatically negative change in the U.S. labor market statistics contained in the latest monthly Employment Situation report from the Bureau of Labor Statistics. Quite the opposite. In April, the total number of jobs in the economy rose by +253,000 and the seasonally adjusted unemployment rate stayed extremely low, at 3.4%.
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.
What’s that you say? There’s a bull stock market underway! Yes, indeed, and it seems hard to believe, given that we were talking about bear market conditions only a few months ago. A bull is a gain of +20% or more in an index from its 52-week low and a bear is a drop of -20% or more from its 52-week high.
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.
Much of my work-related conversation over the past year-plus has concerned the preponderance of mega-sized construction projects being green-lighted in the United States. A megaproject is defined as a project carrying an estimated value of a billion dollars or more.