Construction activity sawa sharp increase in project stress last month, reversing recent declines,according to the latest data from Cincinnati-based ConstructConnect.
The Project Stress Index, a measure of construction projects that have been paused, abandoned or have a delayed bid date, jumped 14.7% in November. Despite this uptick, the index remains below its post-COVID peak and sits 5% lower than where it began 2024, said Michael Guckes, chief economist at ConstructConnect.
“The index has merely unwound the drop in stress conditions that was initiated in the months just before the Fed’s rate cutting began,” said Guckes. “Now, with the election results known, new concerns around higher inflation and the loss of migrant construction labor may be souring the mood of owners and developers.”
The spike came despite an expected additional rate cut after the Fed’s Open Market Committee meeting wraps on Wednesday.
Did the Fed start cutting to late? The construction sector is still suffering a lack of confidence and liquidity.
Both on-hold and abandoned projects levels surged significantly over the past month, according to the data.
Project put on-holds jumped 29.4%, while project abandonments spiked 31.9%.
The reversal brings conditions back to levels seen before the Federal Reserve began cutting rates in September. That suggests renewed caution among owners and developers, said Guckes.
“November’s results saw a significant rebound in on-hold and abandoned activity from the historic lows of recent months,” said Guckes. “This could be a signal that the market was overly optimistic about what the Federal Reserve was willing to do.”
More proof the Fed actions impact the real blue collar economy.