Construction stress improved in August after a sharp spike earlier this year, but there’s been some erosion in public projects, according to the latest data from Cincinnati-based ConstructConnect.
The Project Stress Index, a measure of construction projects that have been delayed or abandoned, fell 5.9% from July to August. Although that marked a positive in the short term, the monthly improvement still leaves overall stress levels 4.6% above the 2021 baseline and higher than a year ago, according to the data.
August brought broad-based relief, as on-hold activity and bid delays ticked down 12.2% and 1.7%, respectively, said Devin Bell, associate economist at ConstructConnect. Abandonments also decreased 4.9% in August, an improvement tacked onto the 37.1% drop in July.
“August’s PSI reading showed improvement across all three indicators,” Bell told Construction Dive. “Bid date delay activity set historic lows, while on-hold activity remains near historic averages. Abandonment activity decreased from elevated levels in previous months but remains near pattern highs.”
Private projects posted the sharpest recovery, said Bell. Additionally, the Federal Reserve’s 25-basis-point interest rate cut on Wednesday will likely serve as a boon for private work momentum, according to contractors.
On-hold activity in the private sector fell 71% year-over-year and abandonments ticked down 8.1% compared to August 2024. Bell added private abandonment, which spiked following Liberation Day tariff actions on April 2, have now settled back into historic ranges.
“Following Liberation Day, the PSI experienced a surge in private project abandonments. While there are many reasons why this surge may have happened, it is likely that some projects were abandoned out of concern for a loss of cost control and operational and construction expense,” Bell told Construction Dive. “Thankfully, more recent private abandonment activity has returned to well within historic bounds.”
However, now the public sector, which has been a bastion of relative strength, showed some worrying signs.
For example, abandonments in education, water and sewer, municipal construction and transportation projects jumped 223% year-over-year, according to Bell. To that point, the University of Iowa recently put on hold its $1.5 billion inpatient tower in response to major federal funding cuts, according to Construction Owners Club.
Nevertheless, Bell said despite more owners walking away from public projects, overall abandonment activity declined for the month and has returned to historically normal levels.
And yet, overall stress remains higher than 12 months ago. Despite August’s improvement, the Project Stress Index is still nearly 19% higher than at this time last year, according to the report. Over that same time period, overall abandonment activity has jumped 88%.
That’s a significant move, but ConstructConnect emphasized its index came off a yearly low in August of 2024 and that increased year-over-year levels reflected more of a normalization than sustained stress.
