Vermeulens Market Outlook Forum – Q2 2023

Market Outlook Forum – Q2 2023

Vermeulens’ market reports are based on bid prices in the Nonresidential Construction Industry. Forecasts are based on leading indicators and historical comparative analysis.

Fed Watch – Another Growth Recession?

  • Ongoing increases raised interest rates to 5.25% in May, along with continued quantitative tightening. This has caused a decrease in interest rate-sensitive sectors such as residential construction and investment. For insight into central bank policy, go to Another Growth Recession? at Green at No Cost
  • Commodity prices continue to decline to long-term averages
  • The New York Stock Exchange has increased by 9.58% year over year but remains below its prior peak
  • Total Employment Growth through Q2 was 228,000 on average per month, well above recession levels
  • Gross Domestic Product: Growth for 2023 was 2.39%. Q2 2023 increased to an annual rate of 2.56%

Beyond Estimation Market Outlook

  • Vermeulens Index of Nonresidential Construction Prices rose in Q2 of 2023 at 0.75% per month
  • Short-term construction price inflation is forecast to continue at 9%, tapering toward 6% for 2023, 5% for 2024, then settling to a long-term average of 4%
  • Volatility is declining. We now recommend bidding contingencies in the 0 to 10% range for projects bidding in the near term
  • Supply Chain Shortages, labor shortages, and increased backlogs have impacted bid prices. However, supply chain improvements and fear of recession have reduced the cost impact of these factors
  • Architectural Billings went up slightly in May and June but continued down by the end of June
  • Construction Dollar Volume: Residential construction went up in Q2 by 3.80%; Nonresidential construction is up 31.2% year to year; and Infrastructure spending decreased  0.08% in Q2. For insight into growth trends in these sectors, go to Sectoral Watch at Vermeulens Blogs and Industrial Revolution Redux at Green at No Cost
  • Construction Job Growth: Approximately 62,000 construction jobs were added in Q2 or +0.79%; construction employment is now 3.7% above pre-pandemic levels

 

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Richard Vermeulen - Construction Economist for Green Building

Richard Vermeulen is the construction economist creating profitable sustainability in the built environment. He’s the founder of GreenLight™, author of Green at No Cost, and developer of the Total Benefit Analysis and The Value Process as well as co-CEO, lead economist, and chief estimator for Vermeulens. Richard has developed industry-leading standards for estimating and data-basing complex construction projects throughout North America. In addition to consulting for thousands of major projects over 30 years, Richard has designed and built residential and commercial projects, from hammering nails to hound-dogging bureaucracies. He has traveled extensively, always with an awareness of how cities do and don’t work.

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