Midyear Construction Check: Cooling Inflation Boosts Most Sectors

A new report focused on the U.S. construction landscape highlights a mixed bag of trends for the industry, ranging from the good to the ugly.

For example, inflation and interest rates have been a thorn in the side of contractors and project owners for the past two years. However, the latest consumer price index indicated cooling inflation, sparking optimism among forecasters for at least one interest rate cut before the end of the year.

But until the Fed slashes rates, certain construction segments will struggle, especially those not boosted by infrastructure or manufacturing spending, according to Marcum’s most recent quarterly Commercial Construction Index released last month. 

That’s bad news for some commercial construction sectors such as warehouses and retail. Demand for warehouse space has leveled off following the pandemic-driven boom in e-commerce, while new retail construction continues to face decreased demand, according to New York City-based Marcum, a national accounting and advisory firm.

On the other hand, spending on manufacturing-related projects, spurred by federal incentives and onshoring efforts, has surged about 192% over the past three years, while infrastructure construction has also posted significant growth, said Anirban Basu, chief construction economist at both Marcum and Associated Builders and Contractors.

To read the rest of the article from our sister publication Construction Dive, click here.