Industry Experts Warn Construction Indicators Are Losing Reliability

Written by:

Rudi Davis

Date:

05 Sep 2025

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Construction industry stakeholders may need to rethink their reliance on traditional market indicators, according to a leading economist who suggests these metrics may be losing their predictive power in today’s volatile market environment.

Ken Simonson, Chief Economist at Associated General Contractors of America, argues that rapid policy changes and market uncertainty are undermining the reliability of long-trusted industry forecasting tools.

The Shifting Landscape of Market Indicators

The Architecture Billings Index (ABI), long considered a reliable 9-12 month leading indicator for construction activity, has shown concerning trends. “Unfortunately, it’s been below 50, meaning architecture firms keep seeing declining billings, but been below 50 for most of the last three years,” Simonson notes.

However, Simonson suggests the index’s predictive value may be compromised by the changing nature of architectural work. “Architects sure, they do billings for design, but then they’re also involved with the whole construction process. There isn’t a clean distinction between the time that billings occur and when construction happens.”

Dodge Momentum Index Challenges

The Dodge Momentum Index, long regarded as a reliable measure for projecting construction starts a year in advance, may no longer carry the same weight in today’s market. Simonson notes that in an environment defined by constant uncertainty, the traditional link between the index and future activity has weakened. Factors such as contract shifts and fluctuating market conditions have disrupted what was once considered a dependable forecasting tool.

According to Simonson, the real challenge is the unprecedented speed at which critical market factors now evolve. Rapid changes in tariff policies, volatility in government contracts, and shifting grant and appropriation patterns all make it increasingly difficult to rely on traditional indicators. This accelerating pace of change underscores the need for new approaches to understanding and predicting construction activity in today’s volatile environment.

New Reality for Market Analysis

For industry stakeholders, this shifting landscape requires a more nuanced approach to market analysis. “We may have hopeful signs now that things will pick up in 12 months, but so much could change that I don’t put a lot of stock in that number,” Simonson cautions.

The employment picture further illustrates this complexity. While construction employment has been rising faster than total non-farm payroll employment, growth has slowed significantly. “Construction employment has… slowed down to just a 1.2% gain from July of last year to July of this year, whereas a year or two ago, it was running at a two or 3% rate,” Simonson reports.

Looking Forward

For developers and investors, Simonson’s analysis highlights the importance of adopting a broader, more adaptive strategy when evaluating opportunities. Instead of leaning exclusively on traditional construction indicators, stakeholders are encouraged to track a wider range of market signals, from shifting tariff policies to government funding patterns. Flexibility in planning timelines and the inclusion of contingency measures are becoming essential tools to navigate growing uncertainty.

The underlying message is clear: the reliability once associated with established forecasting tools can no longer be taken for granted. In a market defined by rapid shifts and volatility, developers and investors must be prepared to pivot quickly, making decisions based on a more holistic understanding of evolving conditions rather than relying solely on historical patterns.