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Project Stress Index records slight improvements after September interest rate cuts

2024-11-15T14:45:00-05:00

The new ConstructionConnect Project Stress Index (PSI) composite reading for October has shown a mild improvement to 104.2, rising 0.8% for the month after a revised September reading of 103.4.

Compared to the same month one year ago, the composite is down 11.6%. This is the fourth consecutive month in a row for year-to-year contractions. However, ConstructionConnect's Chief Economist Michael Guckes tells us: "This year has been very good for the PSI, with year-to-date composite performance down 14.6%. If conditions continue at this level for the rest of the year, the PSI will arguably have its best year since 2021."

The total number of project abandonments, along with the number of on-hold projects, were both recorded as hitting new multi-year lows. Guckes says it is due largely to the preemptive anticipation of Federal Funds Rate (FFR) decreases, which have an impact of pr...

July sees sharp improvement in project conditions as interest rates are expected to fall

2024-08-19T16:29:00-04:00

ConstructConnect’s Project Stress Index reading for July has experienced a sharp decline of 14.2% and is now at 96.2, following June’s revised reading of 112.5. Compared to levels from a year ago, the Index has fallen 6.1%.

Last month saw decreases across all stress components, with abandonment activity experiencing the most severe monthly decline, which was a 24% fall. This was followed by an 11% dip in on-hold activity and delayed bid activity, which fell 6.8%.

ConstructConnect attributes the abrupt and steep shift to an anticipated reduction of interest rates by the Federal Reserve.

As said by ConstructConnect Chief Economist Michael Guckes, “If owners and developers believe they need only wait a few more weeks—or just a few months at worst—for lower interest rates, then they would be correct in thinking that now is not the time to abandon or put projects on hold. Why abandon a project now if, in just a few weeks, falling commercial real estate mortgage rates will make that proje...

Project Stress Index reading for June sees 1.5% increase, driven by project abandonments

2024-07-16T18:39:00-04:00

ConstructConnect’s latest Project Stress Index (PSI) reading, which measures the level of non-residential projects that have experienced a delayed bid date, being placed on hold, or being abandoned, for June 2024 is up 1.5% from May. The figure of 112.7 is up 9% from June 2023.

As reported by Construction Dive, project abandonments increased by 10.7%, delayed bid activity saw no change, and work put on hold fell 6.6% over the past month. Since mid-May, weekly and monthly readings have roughly hovered between 110 and 113, which indicates that current levels of project stress are only slightly more than 10% above the average level recorded during the 2021 calendar year.

“Among abandoned projects, it is very possible that this number is being fueled by only a few severely impacted subcategories,” said Michael Guckes, chief economist at ConstructConnect, to Construction Dive. “Chief among suspects are private offices which continue to gravely struggle against current financial market c...

Nonresidential project abandonments show improvement despite discouraging performance in the public sector

2024-05-10T17:39:00-04:00

Project abandonments remain on an upswing across the country, according to an analysis of construction project data in the latest ConstructConnect Project Stress Index for the week ending April 27th. Over the past month, Delayed Bid, On Hold, and Abandoned activity have increased by 4%, 7%, and -6%, respectively. The number of Abandoned projects in the public sector is now up 44% when compared to year-ago levels.

Meanwhile, ConstructionConnect says: “The PSI continues to trend within a narrow range of between 120 and 130, indicating a steady level of industry project stress that is 20% to 30% greater than our 2021 base period."

“We traded a more severe form of stress for a lesser form of stress,” said Michael Guckes, senior economist at ConstructConnect, told Construction Dive in reference to last month's more concerning declines. “[This] is a positive. We would rather see more on-holds than abandonments. For this reason, it has been harder for us to be excited about the latest dec...

Project abandonments rose sharply across the country during March

2024-04-05T15:48:00-04:00

Project abandonments have spiked recently across the country, according to a new analysis of construction project data contained in the ConstructConnect Project Stress Index for the week ending on March 31st.

Construction Dive has more on the latest economic indicators impacting nearly every sector of commercial architecture, including the startling revelation that outright abandonments have increased by 60% from 2021 base levels.

“Not many months after interest rates started rising in early 2022, the private sector was quick to respond with greatly heightened levels of abandoned projects,” Michael Guckes, ConstructionConnect's senior economist, explained. “This volatility, coupled with overall elevated weekly readings, has continued with little exception through present.”

However, the total number of privately funded abandoned projects was down 10.7% compared with the same month las...