The Preconomist

The Bureau of Economic Analysis released the third and final estimate of first-quarter 2026 GDP this week. The headline landed at 2.1% annualized real growth, revised up from the second estimate's 1.6% and above the advance estimate's 2.0%. Markets received it as a mild positive surprise. The more important question is what actually moved the number, because the answer is not what a 2.1% print typically implies. The number went from 2.0 to 1.6 to 2.1. What explains that arc? Both prior revisions in this series were driven by what BEA calls source data maturation. The advance estimate is published roughly a month after the quarter closes and relies heavily on BEA assumptions where Census Bureau data is not yet available. The second estimate incorporates updated inventory and trade data. In Q1's case, that revision pulled the number down to 1.6% as inventory and consumer spending data came in softer than assumed. The final estimate moved the number back up to 2.1%. Th...

The Bureau of Labor Statistics (BLS) released May 2026 Producer Price Index data this week. For construction, two numbers define the month: nonresidential construction inputs rose 8.4 percent year-over-year, and nonresidential construction outputs rose 3.5 percent over the same period. The gap between those two figures is 490 basis points and has been widening for months. The input index tracks what contractors pay: materials, freight, equipment, and other goods consumed in the construction process. The output index tracks what contractors charge: the price of completed nonresidential construction delivered to owners. When inputs outpace outputs, the difference must land somewhere. It lands on margins. In May, nonresidential inputs rose 1.8 percent month-over-month. Nonresidential outputs rose 0.1 percent. The monthly spread is consistent with the annual one. This is not a one-month anomaly. It reflects a sustained period in which bid prices have not kept pace with cost escalatio...

The May jobs report landed this week with a headline that sounds good with 172,000 jobs added. This marks the third consecutive month of positive payroll growth with upward revisions to March and April totaling 93,000 jobs. The unemployment rate held at 4.3 percent. By any standard read, that is a solid report. When you read the Employment Situation along with the JOLTS report, they tell a more complicated story and we need to look past the headline before drawing any conclusions. What did the report show for construction specifically? Construction employment was essentially flat in May. BLS characterized it as "little change over the month," the same language used for manufacturing, retail, and several other sectors. The sector has added 65,000 jobs since January, which sounds healthy, but the monthly pace has cooled considerably. January alone accounted for 45,000 of those gains. The spring hiring that typically accelerates the sector's seasonal recovery has been mu...

CPI dropped Tuesday with PPI following on Wednesday. One measures what consumers are paying and the other measures what it costs to produce. Together they tell you something the headlines missed. CPI hit 3.8 percent in April, the highest in three years, driven by the Iran energy shock. But that is the consumer story, the construction story lives in the PPI, and it is not primarily about energy. PPI data shows nonresidential construction material inputs up 6.6% year over year, but bid prices are only up 3.6%. What does that spread mean? It means contractors are absorbing costs they cannot fully pass through. Inputs measure what it costs to build, while bid prices measure what the market will pay to have something built. When inputs outrun bid prices by 300 basis points, someone is carrying that difference. In construction, that difference lands in contractor margins. It does not stay there indefinitely. The compressed margin eventually shows up as fewer bidders, shorter bid list...

The April employment report landed this week. Here is what the construction numbers tell us. The headline number was 115,000 jobs added across the economy in April. What happened in construction specifically? Construction employment showed little change in April on a month-over-month basis. This is notable since April is historically one of the strongest months of the year for construction hiring. Seasonal patterns push workers back onto sites as weather improves and project activity accelerates. A flat reading in April is not neutral, it is a miss relative to what the calendar normally delivers. The year-over-year picture adds context. Construction employment in April 2026 is 50,000 higher than it was in April 2025. That sounds reasonable until you compare it to where that number has been. In April 2024, the year-over-year gain was 215,000. In April 2025, it was 101,000. Over the last ten years the average is 243,400 when you exclude the spikes in 2020 and 2021. In April 2026, it is 5...

The Bureau of Economic Analysis released its advance estimate of first quarter 2026 GDP this week The headline number, 2.0% annualized real growth, will dominate the financial press. It represents a meaningful rebound from the fourth quarter's 0.5% reading, and on its face signals an economy that is holding together under considerable pressure. For most readers, that is the story. For owners, developers, and preconstruction professionals in the nonresidential construction market, the story is in a different table entirely. What drove the Q1 GDP print? The BEA attributed Q1 growth to increases in investment, exports, consumer spending, and government spending. The investment category carries the most weight for construction audiences, but the composition matters. Gains in equipment, led by computers and peripheral equipment reflecting the ongoing AI infrastructure buildout, and intellectual property products drove the investment contribution. Private inventory investment also added ...

What the ABI and DMI Are Actually Telling You The nonresidential construction market has two widely cited leading indicators. Both are released monthly. Both claim to forecast where building activity is headed roughly nine to twelve months out. In March, they appeared to diverge. One recovering toward neutral, the other pulling back from an elevated peak. Most readers see the headlines and move on. Few ask what these figures measure, or if the signals are as reliable as advertised. The Architecture Billings Index (ABI), published monthly by the American Institute of Architects and Deltek, is a diffusion index. It is based on a survey of architecture firms asking whether their billings increased, decreased, or held steady compared to the prior month. The result is a score centered on 50. Above 50 means more firms reported growth than decline. Below 50 means the opposite. Since the ABI measures direction, not dollars, inflation does not distort it. Its limitations are different. It is a ...