Executive summary
Construction contracts but political change should drive the industry forward
The US economy remains in a position of strength. Gross domestic product continues to grow in Q3 2024, inflation has been moderated, and recent rate cuts are encouraging for stimulating economic growth.
However, America’s construction industry has contracted, with spending falling for many sectors in Q3 2024. Furthermore, leading indicators are suggesting the current slowdown may remain for the short term, although there is optimism in the industry, primarily based on order book and pipeline activity.
This cool down has also had a wider effect on construction input costs, with materials, labor, and machinery and equipment escalating at lower rates than in previous quarters for certain regions. Escalation growth, however, remains sticky.
There are many unknowns going into 2025 that may change the trajectory of the construction industry and bid prices. Further rate cuts could heat up the construction market and we continue to observe a positive trend in the ‘return to office’ drive. This, in turn, is impacting businesses decisions on workspace needs along with conversations on the future of the workplace. The incoming presidential administration may also put in place new policies affecting the construction industry, with tariffs being a potential disruption to supply chains and material prices, and a question on how remaining Biden-era public funds will be allocated.
In summary, there is optimism in the US construction market against a backdrop of change and uncertainty.
