Dive brief:
- Project abandonments rose 7% last month, according to the Project Stress Index by Cincinnati-based ConstructConnect, a measurement of construction projects that have been stopped, abandoned or have a delayed offer date. the jump high levels followed also in last month’s index.
- Backlog job activity was flat, while job vacancies fell 14% over the past 30 days, marking the steepest 30-day decline since mid-2023, said Michael Guckes, senior economist from ConstructConnect. Together, these positive aspects led to a 2% drop in the index itself, but highlighted the increase in abandonments, especially in publicly funded projects.
- “Right now, what’s clear from the year-to-date data is a steady and growing public trend in holdups and abandonments,” Guckes told Construction Dive. “As we move towards 2024 we continue to see historically high levels of dropouts.”
Diving knowledge:
Guckes added that dropouts are up 60% from the base year level.
For the public sector, which includes infrastructure works, stalled projects rose about 3.6 percent from the same week a year ago, the report said. Meanwhile, abandoned public projects increased by 40.8% compared to the same period last year.
While the weakness of the public sector is a relatively new development, the long slide of the private sector continued. Pending private projects were up 105% compared to the same week in 2023, Guckes said. For example, Jay Paul Co., a Bay Area real estate company, recently delayed its large tech campus project in San Jose, California, according to The Mercury News. The office, retail and restaurant complex stalled due to the region’s shaky office market.
Meanwhile, private project abandonments were down 10.7% from the same period a year ago.
“Not many months after interest rates began to rise in early 2022, the private sector quickly responded with very high levels of abandoned projects,” Guckes said. “This volatility, along with general high weekly readings, has continued with little exception to the present.”
