Construction market overview
US construction records weak growth in Q1 2024
Lagged Bureau of Economic Analysis data confirmed that real US construction GDP ended 2023 on a high, growing by 7.5 percent year-on-year in Q4 2023. Although this metric is dated, it remains important because it is adjusted for inflation. In other words, it measures the actual volume of activity, excluding the impact of escalation. However, Q1 2024 construction GDP data will not be available for some time.
Construction spending data, however, including escalation data on outcomes, show that the opening three months of 2023 were less bullish, and the value of construction moved to an increase of 0.3 percent on the quarter. The residential sector, which is more exposed to interest rates and capital investment flows, fell by 0.3 percent over the same duration in Q1 2024.
Source: Census Bureau
In real terms, overall construction activity in Q1 2024 may well have stagnated. Non-residential workloads remain buoyant, though, with construction spending increasing by 0.7 and 15.2 percent in the quarter and year, respectively, despite growth rates cooling.
Infrastructure, education, and healthcare sectors are still in good shape, with manufacturing offering the best growth figures across all major industries. Following President Biden’s Inflation Reduction Act (IRA), construction spending in the manufacturing sector surged by 39.6 and 71.3 percent in 2022 and 2023, respectively.
The onshoring of many battery manufacturing facilities for electric vehicles (EVs) also added to rapid growth figures. In summary, while battery manufacturing onshoring and EV growth continue, the 2024 election could shape the future of EVs, subsidies, and regulations.
Q1 2024 figures for manufacturing are a notch down, however, growing by 31.0 percent on the year. While encouragingly high, this is the fourth consecutive quarter of easement. One aspect to consider here is the difficulty of maintaining such rapid acceleration of delivery. Another could be that several EV firms are taking an increasingly cautious approach to investment and staffing levels, which may see manufacturing growth ease further.
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