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In the construction industry, the recent real GDP figures defied expectations, surging to 4.9% in Q3, primarily driven by a significant consumer surge, contrary to the anticipated 1.0% growth. However, Q4 estimates, though less robust, are currently at 2.1%. Raw material inventories remain at multi-decade lows, impacting global LME warehouses, but the slow global economic pace tempers the supply effects. Labor costs in the construction sector persist at or near all-time highs, with a current Employment Cost Index reading of 158.7. Manufacturing data shows the US near expansion at 50.0 in the PMI, while Mexico stands at 52.7, its highest in nearly a year, and Canada shows improvement at 48.6.

Despite the US avoiding a recession for over a year, concerns arise for 2024, with predictions of a mild recession in Q1 and Q2 (at -1.0% and -0.7%, respectively), followed by growth in Q3 and Q4. The economic outlook has sparked discussions on interest rates and Federal Reserve policies, questioning whether rates will be lowered to combat the downturn. As of now, the Fed remains cautious due to persistent inflation concerns. While there’s no evidence of an energy crisis amid Middle East turmoil, the winter peak in gas demand poses risks, especially with the US oil supply at a precarious low point.

Learn more about the December 2023 Construction Industry Outlook by downloading the CICPAC report below.

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