Executive summary
Tailwinds fade and headwinds persist to slow the US economy and its construction industry
The US economy and construction sector continue to grow, underpinned by resilient demand conditions.
Interest rates, however, remain high, due to the unrelenting growth of general inflation. This is impacting the pace of economic and construction growth, which has shifted down a gear.
Steadfast sub-sectors, such as industrial and manufacturing, and infrastructure workloads remain bright but are easing off. Residential and commercial real estate's outlook has improved yet continues to be faced with several headwinds.
Similarly, regional variations persist. The Phoenix metro area is expected to continue its steady growth trajectory, supported by data center activity and a growing population. West Coast locations, while still growing, are reeling from a flight of capital from the technology sector and low return-to-office rates.
General inflation’s stubbornness can be seen in construction escalation as well. A slight increase in material costs is evident, wages continue to grow, and isolated supply chain constraints have kept input costs high.
This has had a knock-on effect on bid price growth, with easement in price growth stalling. However, disinflation is likely to pick up again as contractor workloads soften over the latter part of 2024.
In a nutshell
1.3%
Quarterly GDP growth as of Q1 2024 (annual rate)
7.5%
Quarter on year construction GVA growth as of Q4 2023
3.5%
Bid price inflation (escalation) estimate for 2024
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