ProjectSight Flipbooks

Construction Activity Index - Q3 & Q4 2023 ©Trimble Viewpoint, Inc. All Rights Reserved. Executive Summary Across the industry, project starts decreased 35% when compared to Q3 and Q4 of 2022, and they decreased 28% year-over-year. This was most pronounced with heavy highway and civil contractors who saw the largest decline—74% from Q3 to Q4 2023 and 73% year-over-year. General contractors also saw smaller declines—27% and 32%, respectively. Specialty contractors saw the lowest declines—20% in Q3/Q4 and 14% year-over-year, which could reflect the fact that they do a significant amount of routine service work. Contract values also declined, though the declines didn't seem quite as dramatic—13% in Q3/Q4 and 7% year-over-year. In general, contract values tend to decrease as projects decline as contractors are forced to compete for smaller, less profitable projects. Interestingly, specialty contractors were the most hard hit, with a 69% decline in Q3/Q4, while heavy highway and civil contractors fared slightly better with a 38% decline in Q3/Q4. General contractors managed to increase their contract values 20% during the Q3/Q4 time period but still saw a 25% decline year-over-year. When project starts and contract values decline, contractors tend to hold onto cash, which was seen in Q3/Q4 as cash flow increased 9% and remained flat when compared year-over-year. This was most pronounced with heavy highway and civil contractors who held onto the most cash, followed by specialty contractors. General contractors actually spent more money in Q3/Q4 2023 as compared to the same time period in 2022, which could correspond to the fact that they saw an increase in contract values during that same time period. While the price of copper has been relatively stable in 2023, it dropped by about 2% in the second half of 2023. This may indicate that there is less demand for copper, given the overall decrease in project starts, contract values, and the fact that most contractors continue to hold onto cash. Despite lowered project starts and contract values, contractors continued to build their workforces: Net hiring increased 1.5% compared to Q3/Q4 of 2022 while slightly decreasing when compared to year-over-year. Small increases were seen across all verticals in Q3/Q4, as contractors continue to struggle to find qualified talent. 6 The data from the second half of 2023 ( July 1 - December 31) demonstrates that many of the themes we've seen in previous quarters—declines in project starts and contract values and an increase in cash flow—remained solidly in place for the back half of the year. The main difference was hiring, which saw minor gains, reflecting the fact that contractors remain committed to building out their workforces. All of this could demonstrate that contractors are continuing to see new project starts slow down, and that many of those projects had lower contract values, causing contractors to hold onto cash rather than spend it.

• Cover