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 private CRE lending.

This means that in the private sector, abandonments have performed "favorably." Year-to-date abandonment activity is now seen as trending lower, with especially sharp declines taking place right before the decision to cut interest rates was made in early September.

"With September’s [Federal Interest] rate cut in the books, the PSI has seen a modest increase in stress levels as readings for delayed bid dates, in particular, have bounced from recent record lows," Guckes concluded. "Expectations of future rate cuts should continue to lower future stress readings and set the construction industry on a rebound trajectory as soon as 2025."