The construction sector published a significant reduction in project stress last month, showing much-needed progress after a volatile year, according to the latest data from Cincinnati-based ConstructConnect.
The project stress index, a measure of construction projects that have been stalled, abandoned or have a delayed bid date, fell 7.4% in December. That number remains 5.6% above 2021 levels, but well below its January 2024 peak, said Michael Guckes, chief economist at ConstructConnect.
“The year-end 2024 readings were very encouraging as they confirmed how much progress has been made in the industry over the past year,” Guckes told Construction Dive. “Now that the Federal Reserve has begun cutting interest rates and with a pro-business presidential administration about to take office, many in the financial and construction sectors appear to be breathing a sigh of relief.”
According to ConstructConnect, the drop in stress levels in December stemmed from sharp declines in delayed bid activity and project abandonments.
For example, backlog activity fell 10.8% in December, reaching a five-year low in the private sector. Project abandonments fell 16.1% overall, and private sector abandonments fell 27.4% compared to the same period in 2023.
Public sector projects also showed improvements, according to the data. Stalled public projects fell 8.9% year-on-year, while public sector abandonments decreased 3.6% over the same time period.
However, while bid delays and abandonments declined, pending projects rose 6.2 percent in December, Guckes said. He attributed this to seasonal and administrative factors that usually accompany year-end transitions in the public and private sectors.
“December’s results marked a strong end to the 2024 construction year,” Guckes said. “The upcoming change in presidential administration, the recent cuts in the federal funds rate, and with much of the banking world overcoming its worst fears about the commercial real estate market, stress levels are only slightly above of 2021”.
