The construction industry posted a significant decline 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 paused, abandoned or have a delayed bid date, fell 7.4% in December. That figure still remains 5.6% above 2021 levels, but far below its January 2024 peak, said Michael Guckes, chief economist at ConstructConnect.
“Year-end 2024 readings were very encouraging as they confirmed just how much progress has been made in the industry over the last year,” Guckes told Construction Dive. “Now that the Federal Reserve has begun to cut interest rates and with a pro-business presidential administration about to enter office, many in the financial and construction sectors appear to be breathing a sigh of relief.”
December’s decline in stress levels stemmed from sharp drops in delayed bid activity and project abandonments, according to ConstructConnect.
For example, delayed bid activity fell 10.8% in December, hitting a five-year low in the private sector. Project abandonments dropped 16.1% overall, with private sector abandonments declining 27.4% compared to the same period in 2023.
Public sector projects showed improvement as well, according to the data. Public projects put on hold fell 8.9% year-over-year, while public sector abandonments declined 3.6% over the same timeframe.
However, while bid delays and abandonments declined, on-hold projects increased by 6.2% in December, said Guckes. He attributed this to seasonal and administrative factors that typically accompany year-end transitions in the public and private sectors.
“December’s results marked a strong finish to the 2024 construction year,” said Guckes. “The forthcoming change in presidential administration, the recent cuts to 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 2021 levels.”
