2024 Q2 Economic Indicators
High interest rates are causing ongoing uncertainty across various market segments for the rest of 2024. Projects that depend on financing are facing significant challenges, limiting substantial growth. Despite these hurdles, the broader industry is showing resilience against economic pressures, positioning us for steady, incremental growth throughout the year.
Projects most impacted by financing include multifamily, lodging, and commercial construction. According to the AIA, one-third of delays are due to financing and economic concerns, with billings falling for the 11th consecutive month. Despite these challenges, the FMI report forecasts that engineering and construction spending will finish 6% higher than in 2023. Manufacturing and public safety are up 20%, supporting the industry alongside education and healthcare, which are expected to show sustained growth. Dodge reports that data centers account for a significant portion of the backlog in the commercial market.
Quick facts:
- AIA: 11th consecutive month of declining billings.
- ABC: Backlog is down to 8.4 months from 9.3 in 2023.
- FMI: Spending is forecasted to be up 6% YOY.
- Dodge: Data centers are accounting for a significant portion of commercial growth.
The Fed began cutting rates in Q3 and is expected to continue doing so in a slow, methodical manner. If rates keep dropping, delayed projects may gain momentum in 2025. For more insights on how interest rates impact backlog and project planning, read our report.
MM Market Experience:
Much of our pipeline in Columbus and Charlotte aligns with the segments reporting growth. Year-to-date, we have responded to 130 RFPs, with 45% being public projects that are not affected by interest rates. While we have seen some activity from clients in the multifamily, hotel, and office sectors, these projects have generally been slower to secure financing and move forward.
MM Market Breakdown YTD:
- 45% Public / Higher Ed. / Government
- 20% Commercial / Warehouses / Data Centers
- 13% Healthcare
- 16% Industrial / Manufacturing
- 6% other (religious, recreation, etc.)