Construction MMI: Architecture Sector Sees Slight Recovery


Since December 2022, the Construction MMI (Monthly Metals Index) has seen multiple factors pull it up and down. Indeed, steel price hikes, high interest rates, government funding for infrastructure and recession fears have all pummeled the index. Ultimately, the index experienced another sideways movement between April 1 and May 1, though it notably traded down slightly instead of up. Despite this, the construction index remains in a tight sideways trend, having inched down just 2.19%.

One thing worth noting is that Chinese rebar prices are currently below support zones. Since rebar is a crucial part of construction, especially for public projects, such low prices somewhat counteract the impact of high interest rates. However, the index’s future continues to face bearish pressure due to high interest rates and recession concerns.

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U.S. Architecture Sees Some Recovery

The U.S. architecture industry has shown signals of development and bounced back during the last two months. According to the AIA/Deltek Architecture Billings Index, nonresidential building activity continues to increase. Overall, this is a favorable economic signal for the industry. In addition to this, ArchDaily recently highlighted several innovative architectural projects with the potential to change the sector dramatically. According to a recent survey conducted by Appleseed Strategy 4, most analysts expect architecture firm business to rise thanks to around $600 billion in construction projects.


Meanwhile, public projects continue to have an advantage over private projects like home building, especially given current high interest rates impacting mortgages. After all, private enterprises typically lack the government’s access to low-cost financing sources, leading to higher PPP (public-private partnerships) finance costs. PPPs allow organizations to finish large-scale government projects with private money. However, many people ignore PPPs’ ability to handle many of the non-financing pain points in infrastructure development and delivery.

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Housing Construction News: Market Recovers Slightly

The housing construction sector in the United States exhibited some signs of stabilization. According to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development, housing starts jumped by 9.8% in February to 1.45 million units following a six-month drop. This pattern continued in March, with single-family home building growing for the second consecutive month and permits for future construction increasing. This caused some analysts to speculate that the worst of the housing market slump is likely behind us.

Source: St. Louis Fed/FRED Economic Data

Meanwhile, housing starts fell 0.8% month over month in March 2023 to a seasonally- adjusted annualized pace of 1.42 million. This followed a downwardly-revised 1.43 million in February

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Housing Construction Still Facing Bearish Pressure

Despite this short-term optimism, the U.S. housing construction market still faces significant bearish pressure. Indeed, analysts expect overall construction output to fall by 5% due to a drop in residential construction. With the economy down, US residents are less likely to build new home and/or move and instead stay put until economic conditions improve. Rising interest rates are also to blame for this. The same analysts also expect further housing development downturns in 2023.

Indeed, the National Association of Home Builders (NAHB) forecasted negative GDP growth for the first two quarters of 2023. This suggests there is potential for large-scale economic downturns.

In other construction news, many predict that office construction will diminish in 2023 due to the prevalence of remote work. This is another element that may contribute to the general downturn in the U.S .construction industry.


Other Construction News: Notable Price Trends

  • Chinese aluminum bar traded sideways, dropping a mere 0.92% in price. Prices at month’s start sat at $2926.31 per metric ton.
  • Chinese rebar steel dropped significantly in price by 9.83%, bringing prices to $584.97 per metric ton
  • Weekly Midwest bar fuel surcharges dropped by 11.94%, which left prices at $0.59 per mile.
  • Finally, Chinese h-beam steel fell in price by 10.09%, bringing prices to $570.49 per metric ton.

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