The Preconomist

Input costs are running faster than bid prices. The Iran energy shock isn't in the data yet. And the commodity markets are already telling us where the next PPI reading is headed.     The 3.7% year-over-year input number looks manageable. What's the real story? The year-over-year framing obscures the pace. Through just two months, construction input costs are running at a 12.6% annualized rate. That pace was set before the Iran conflict moved oil toward $100 per barrel. There is also a diesel tailwind embedded in the February headline that is already obsolete by the time you are reading this. The PPI has a hard measurement cutoff. The commodity markets do not. The table below reflects what is already in motion, a preview of where the next PPI reading is heading, not a refinement of this one.   Diesel up 36.7% in a single month is the Iran war arriving in energy prices in real time. The February PPI still shows diesel as a tailwind. That tailwind is gone. PVC at ...

The February Construction Backlog Indicator says the market is stable. The data underneath says something more complicated. The headline backlog number is up from January. Isn’t that good news? Technically, yes. Directionally, it depends on where you're standing. ABC's Construction Backlog Indicator (CBI) rose to 8.1 months in February, up 0.1 from January, but context matters here. January's reading was a four-year low. You don't pop champagne because you climbed off the floor. When you look at the year-over-year picture, backlog is down 0.2 months from February 2025. The correct read isn't that "the market is growing", but rather it's "the market stopped falling, for now." This is a meaningful distinction if you're budgeting, hiring, or bidding work in 2026. So is this still a "yellow light" market? Yes. February's data makes that case more precisely than January did. The headline number is steady enough to fee...

  The February jobs report dropped Friday and the headline was ugly. Nonfarm payrolls fell 92,000, the third loss in five months, against a consensus expectation of a 50,000 gain. Not a miss. A reversal. Markets flinched. Commentators called it a warning sign. What does it mean for construction? Start with the construction number, because it's the one most likely to mislead you. The industry shed 11,000 jobs in February after adding 48,000 in January. Taken in isolation, that looks like a reversal. It isn't. That January spike was almost certainly a weather artifact, an unusually mild stretch pulled forward activity, and February paid it back. The two months together average roughly +18,500/month, which is consistent with a sector that's been grinding forward on a narrow base of healthcare, pharma, and data center demand. Don't read the February construction number as a leading indicator of project pipeline softening. Read it as noise. So if the construction job l...

  If you feel like you're running up a down escalator, you aren't imagining it. While mainstream headlines often fixate on nominal dollar records in the broader economy, those of us in preconstruction see a different math. Yesterday's Census Bureau release for December 2025 spending data (finally out after the federal delays) tells a story of a sector that isn't just stalled; it's effectively shrinking when adjusted for the cost of doing business. The Census Bureau noted a 0.3% increase year-over-year in nonresidential spending. When adjusted for escalation, that figure becomes a -3.8% decrease in real spending year-over-year. How long has this been trending downward? We have now hit a somber milestone: overall nonresidential spending, when measured in real dollars, has declined year-over-year for 15 consecutive months. This marks every month since October 2024. In 2023, the industry saw a massive surge that outpaced inflation. But since late 2024, the script ...

  Valentine’s Day is an expensive holiday. While some joke that greeting card companies invented the day to juice profit margins, the current cost of a gift is no laughing matter. Gold prices are hovering near record highs (a topic for a future post), but that heart-shaped box of chocolate will cost you roughly 231% more than it did four years ago. What is driving this "Cocoa-nomics" crisis? To understand the price spike, you need to look at West Africa. Côte d’Ivoire and Ghana produce roughly 60% to 70% of the world’s cocoa. Over the last two years, this region was hammered by record-breaking rains that rotted pods on the trees, followed by a brutal El Niño-driven drought. The 2023/2024 season saw production plunge by 25%, leading to the lowest global yields in decades. This was compounded by a massive spike in production costs. Following geopolitical tensions in 2022, fertilizer prices skyrocketed as Russia and Belarus, two top exporters, were largely sidelined. Many ...

This phrase saw a lot of action on the campaign trail and even during the inaugural address by Donald Trump. Coined in 2018 by Maryland Lieutenant Governor Michael Steel during the 2008 Republican National Convention, Sarah Palin also used the phrase during her vice-presidential debate against Joe Biden that same year. President Trump seeks to boost domestic oil production to lower the cost of crude and the price at the pump. This weekend Trump enacted 25% tariffs on Canada and Mexico, and an additional 10% on China. The Canadian tariffs will only include 10% on energy products. So this means that oil prices are going to come down? Not likely. It is great to implore big oil to produce more product, but based on current data from the U.S. Energy Information Administration, domestic oil production is already at record levels, producing around 13.2 million barrels per day in 2024. Domestic crude oil prices have generally stayed under $80 per barrel since early 3Q24 despite some ge...

Finally some good (enough) news! Last week the ADP jobs report hinted at a cooling off the labor market with a projected 152,000 jobs added. Last Friday the Bureau of Labor Statistics (BLS) reported that an increase of 272,000 jobs while revising March and April numbers down in total by 15,000 jobs (to 310,000 and 165,000 respectively). Unemployment ticked up to 4%, one of the two targets that the fed was hoping to reach. Relating to construction, 21,000 jobs were added in May after a revised total showed no growth in April.   Construction unemployment ticked up to 3.9% versus the 3.7% rate seen a year ago. Most notably though was the continued decrease in job openings which dropped by 8k month over month (m-m) and by 25k year over year (y-y). Hires decreased, also both m-m and y-y, but this does signal any alarms as contractor backlogs stayed flat despite being down by a couple of weeks when compared to a year ago. How can jobs increase so significantly with unemployment a...