There’s no shortage of economic forecasts for the construction business. Many of them are authoritative, well-produced and loaded with expert analysis. They often come from large real estate, property management and financial services companies.
Here are just a few:
But if you’re so inclined, you can skip the published forecasts and draw your own picture of the short-term future. It just takes a handful of reliable leading indicators.
Why do this on your own when so many companies make their own analyses available for free? It’s arguably faster and just as reliable as grazing through 40 pages of small type and colorful graphics. Also, because you can get the latest available data when you want it — not when a corporate marketing team is ready to release it.
No forecast will predict the future with certainty. But with the right metrics, builders and contractors can get a feel for upcoming bid volume, staffing needs and purchasing concerns rather than waiting for unpleasant surprises at the jobsite. The trick is knowing what to look for and where to find it.
Why it matters: Building permit volume is often the clearest early signal of upcoming construction starts, particularly for light commercial, multifamily and renovation work. Permits represent projects that have moved beyond conceptual planning and into a stage where timelines, budgets and material takeoffs are becoming real.
When permit activity begins to rise, it typically signals that owners and developers are confident enough to proceed — which usually translates into more bid requests and near-term material demand.
Typical lead time visibility: 3-6 months
How to use it: Tracking permit trends helps to anticipate workload before projects break ground. Sustained increases often precede tighter schedules and increased competition for labor and materials.
Current data is available monthly — by region, state or CBSA (core-based statistical area, formerly the metropolitan statistical area in Census jargon). Historical data is available from 1995.
Where to find it: U.S. Census Bureau – Building Permits Survey
Why it matters: The Dodge Momentum Index tracks the dollar value of nonresidential projects entering the planning stage, including offices, warehouses, schools, retail, healthcare and institutional buildings. Because it focuses on projects well before construction starts, the DMI is one of the most reliable forward-looking indicators for nonresidential demand.
An upward trend typically signals a growing pipeline of work that will eventually convert into construction starts and supplier demand.
Typical lead time visibility: 6-12 months
How to use it: Watch for directional changes rather than absolute values. A sustained rise suggests future bidding opportunities, while prolonged declines can signal a slowdown ahead.
Where to find it: Dodge Construction Network is a for-profit vendor of construction data and analysis; it charges for access to many of its reports. But its Momentum Index is reported through press releases each month and can be accessed at no charge.
Why it matters: The Architectural Billings Index measures billing activity at architecture firms, effectively tracking design work before projects move into permitting or bidding. Because design typically precedes construction by many months, the ABI often turns up or down well before activity in the field follows.
An ABI reading above 50 indicates expanding billings, while a reading below 50 signals contraction.
Typical lead time visibility: 9-12 months
How to use it: Sector-specific ABI data — such as education, healthcare or mixed-use — can hint at where future construction demand is likely to emerge. Rising inquiries can also signal pent-up demand even when billings remain soft.
Where to find it: American Institute of Architects (AIA):
https://www.aia.org/resource-center > scroll for monthly ABI releases.
Why it matters: The Producer Price Index (PPI) for construction inputs tracks price changes for materials such as steel, insulation, concrete, lumber and other key components. Rising input costs can strain project budgets, delay starts or cause developers to pause or re-price projects.
Conversely, when prices stabilize or decline, projects that were previously shelved may reenter the pipeline.
Typical lead time visibility: 3-6 months
How to use it: Monitoring PPI trends helps to anticipate changes in project feasibility and bid sensitivity. Volatile pricing often leads to longer decision cycles and tighter procurement timelines.
Where to find it:
The website for the Bureau of Labor Statistics Producer Price Index for Construction Inputs offers a wealth of data, but it’s expansive and challenging to navigate. If you want to dig in deep, that’s the place to go: https://www.bls.gov/ppi/.
For a quick visual and interactive graph of how prices of supplies are changing in the construction industry, visit the simplified data reporting of FRED, a free service of the Federal Reserve Bank of St. Louis: https://fred.stlouisfed.org/series/WPUSI012011.
5. Interest Rates
Why it matters: Construction activity is highly sensitive to borrowing costs. Higher interest rates increase financing expenses for developers and owners, making some projects harder to justify financially — especially in commercial and multifamily construction.
How to use it: The Effective Federal Funds Rate (EFFR) — the overnight lending rate banks use to borrow from each other — is a fundamental indicator of short-term borrowing costs.
The 10-year Treasury yield offers a snapshot of the financing environment and is commonly used as a proxy for projecting long-term rates.
Rising rates often signal a future slowdown in private-sector starts, while easing credit conditions can unlock delayed projects and increase bidding activity.
Typical lead time visibility: 3-9 months
Where to find it:
Why it matters: Public-sector construction — including schools, municipal buildings, transportation projects and utility work — can provide stability when private development slows. Federal and state infrastructure programs, bond approvals and agency bid calendars often signal future work well before construction begins.
Typical lead time visibility: 6-12 months
How to use it: Public funding trends help identify opportunities to balance private-sector risk with more predictable public work.
Where to find it:
USAspending.gov: Select year(s) of interest. The report begins with a listing of specific projects. Be sure to scroll all the way through for a varity of other views, including “results over time” and “results by geography.”
Also search for your state’s Department of Transportation bid opportunities as well as local planning departments.
|
Indicator |
What It Predicts |
Lead Time |
Why It Matters |
|
Building Permits |
Upcoming starts |
3-6 months |
Early local demand signal |
|
Dodge Momentum Index |
Planned nonresidential projects |
6-12 months |
Strong national barometer |
|
Architectural Billings Index |
Future design and construction |
9-12 months |
Design activity precedes field work |
|
PPI for Construction Inputs |
Cost pressure on feasibility |
3-6 months |
Rising costs can stall starts |
|
Interest Rates |
Developer financing appetite |
3-9 months |
Borrowing costs steer demand |
|
Public Infrastructure Funding |
Pipeline for public bids |
6-12 months |
Offsets private slowdowns |
When you source through Best Supply, one metric you can count on is on-time delivery of competitively priced materials, supplies, tools and safety equipment. For your next job, give us a call or click here to request a quote.