Interesting post from FT Alphaville about construction.
It discusses a recent IMF note which shows that the construction sector is often a great canary in the coal mine of economic activity.
“An additional percentage point of value-added or employment growth in the construction sector during a boom raises the probability of the boom being bad—followed by subpar economic performance or a systemic financial crisis—by 2 and 5 percentage points, respectively.“
“Strikingly, in our sample, long-lasting booms that featured rapid construction growth never ended well.”
Interesting point that because inflation doesn’t account for housing costs properly the central banks will always be behind the curve.
