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Construction Slows in Fed's Ninth District
20 Dec
Summary
- Construction activity declined slightly in the past six months.
- Rising input costs pressure builder margins significantly.
- Labor demand remains strong despite the slowdown.
Construction activity across the Federal Reserve's Ninth District has experienced a slight downturn over the last six months. Nearly half of surveyed firms reported a decrease in activity compared to the previous year, indicating a softening market. Rising input costs continue to heavily impact profit margins, with a substantial 80% of firms facing increased expenses, while fewer could pass these costs on to clients.
Despite the overall decline and heightened competition, especially in nonresidential sectors, labor demand remains strong. Many construction firms are actively hiring to fill roles impacted by retirements and shortages in specialized skills. Segments like industrial, infrastructure, and healthcare projects continue to drive demand for labor, offering some resilience.
However, a general sense of caution prevails as construction firms face a more uncertain environment. Shrinking backlogs and fewer requests for proposals signal a potential slowdown in future projects. Owners are hesitant to invest, adopting a wait-and-see approach, which is expected to continue impacting the construction pipeline into the new year.
