Construction activity posted a notable drop in project stress, but the improvement was far from uniform across sectors, 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 9.7% in February from the previous month. Civil work, such as infrastructure builds, drove much of that improvement, said Michael Guckes, chief economist at ConstructConnect.
Private projects, on the other hand, continued to face pressure, posting a sharp rise in abandonments and on-hold activity. As a result, the PSI remains 12.4% above 2021 levels, the benchmark year for the index.
“The early months of this year have seen an unusual and even unexpected divergency by sector,” Guckes told Construction Dive in an email. “For those of us who anticipated the new presidential administration would generate a boost in private business confidence thanks to easing regulations and a drop in taxes, we have yet to see any benefits as measured by the PSI.”
Overall abandonments and on-hold projects dropped 14.7% and 5.9% respectively. However, private projects put on hold jumped 36.7% year over year, while private abandonments ticked down only 2.4%, indicating little relief, said Guckes.
In contrast, public projects fared much better, with on-holds dropping 25.3% and abandonments falling 25.8% compared to February 2024.
“Such divergence is rarely seen, especially at the beginning of a calendar year,” said Guckes. “This divergence is very interesting as one would think that public projects under the new presidential administration would be at heightened risk of funding losses and cut backs.”
The contrasting trends suggest that uncertainty among private developers could be contributing to a hesitation to break ground. Total construction starts, for example, dropped 6% in January, according to Dodge Construction Network. Nonresidential building starts, such as office and hotel projects, dipped 18% in January.
Nevertheless, Guckes expects private sector confidence to improve, leading to a rebound in activity.
“Our full year expectations remain that private work will benefit from more relaxed regulations this year while public projects struggle to find funding,” said Guckes.
