Research Briefing | Apr 4, 2023

Persistent inflation could blow hole in construction markets

Persistent inflation could blow hole in construction markets

Many factors, ranging from demographics to broader economic growth to government spending priorities, have large impacts on construction activity. But one dependable pattern that may have been forgotten during the ultra-low interest rate environment of the past ten years is that large changes in interest rates signal eventual turning points in construction activity.

What you will learn:

  • Past experience would suggest a construction downturn is imminent—we are expecting real terms decline in construction work done in the US, and flat to declining markets across much of Europe.
  • A scenario where long-term inflation expectations become de-anchored from central bank targets and cost and price pressures remain persistently elevated could cause a US$2 trillion blow-out for construction globally.

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