Associated Builders and Contractors' (ABC) Construction Confidence Index (CCI) indicates that contractor confidence will continue to rise in the first half of 2015. The diffusion index measures forward-looking construction industry expectations in sales, profit margins and staffing levels with readings above 50 indicating growth.
In summary, first half index readings are as follows:
- Sales expectations rose from 67.3 to 69.4;
- Profit margin expectations were up from 61.0 to 62.9;
- Staffing level intentions dipped slightly from 66.3 to 66.2.
Most expect that sales will continue to expand and profit margins will widen further. ABC's weighted diffusion index for profit margins is now approaching the highest reading in the index's three-year history. The sales expectation reading is even more optimistic with nearly three in four respondents expecting an increase in sales. While the rate of new hires will continue to be brisk, the pace of hiring is not expected to accelerate over the next six months due in large part to a lack of available skilled labor.
"The recovery continues and is now in its seventh year, but there is plenty of reason for concern with respect to the U.S. economy," said ABC Chief Economist Anirban Basu. "Financial markets have been jittery, the global economy has been slowing and Federal Reserve policy has become less predictable and more confusing. While U.S. economic expansion continues to be led by growth in consumer outlays, in part due to extraordinarily low interest rates, nonresidential construction spending growth has become an important supporting actor. Nonresidential spending, including on factories, hotels, office buildings and distribution centers, has continued to climb in the face of more readily available financing, lower retail and office vacancy rates and rising hotel occupancy rates.
"Though the U.S. economy refuses to boom, the pace of growth has been enough to allow the average contractor to secure more work at higher margins," said Basu. "Interestingly, the pace of hiring is not set to accelerate, which may be a partial reflection of the lack of appropriately skilled construction workers available for hire. The expectation is for construction compensation costs to continue to rise given expanding skills shortages, but apparently not by enough to preclude steadily expanding margins."
"While the decline in commodity prices has helped to slow construction in parts of the country, including in portions of Texas, Oklahoma and North Dakota, low fuel prices have induced faster investment elsewhere, including in the U.S. auto industry," said Basu. "The result appears to be that the average construction decision maker is more confident than six months ago when commodity prices were higher. A stronger U.S. dollar has served to suppress U.S. export growth, however, and business investment growth remains mediocre by historic standards. The implication is that the U.S. economy is not poised to break out anytime soon, and that stakeholders can continue to expect frustratingly unexceptional growth close to 2 to 2.5%."
To read more about the latest CCI, click here.
Related Stories
Healthcare Facilities | Mar 26, 2023
UC Davis Health opens new eye institute building for eye care, research, and training
UC Davis Health recently marked the opening of the new Ernest E. Tschannen Eye Institute Building and the expansion of the Ambulatory Care Center (ACC). Located in Sacramento, Calif., the Eye Center provides eye care, vision research, and training for specialists and investigators. With the new building, the Eye Center’s vision scientists can increase capacity for clinical trials by 50%.
Libraries | Mar 26, 2023
An abandoned T.J. Maxx is transformed into a new public library in Cincinnati
What was once an abandoned T.J. Maxx store in a shopping center is now a vibrant, inviting public library. The Cincinnati & Hamilton County Public Library (CHPL) has transformed the ghost store into the new Deer Park Library, designed by GBBN.
Multifamily Housing | Mar 24, 2023
Multifamily developers offering new car-free projects in car-centric cities
Cities in the South and Southwest have eased zoning rules with parking space mandates in recent years to allow developers to build new housing with less parking.
Multifamily Housing | Mar 24, 2023
Coastal multifamily developers, owners expect huge jump in insurance costs
In Texas and Florida, where Hurricane Ian caused $50 billion in damage last year, insurance costs are nearly 50% higher than in 2022.
Multifamily Housing | Mar 24, 2023
Average size of new apartments dropped sharply in 2022
The average size of new apartments in 2022 dropped sharply in 2022, as tracked by RentCafe. Across the U.S., the average new apartment size was 887 sf, down 30 sf from 2021, which was the largest year-over-year decrease.
Government Buildings | Mar 24, 2023
19 federal buildings named GSA Design Awards winners
After a six-year hiatus, the U.S. General Services Administration late last year resumed its esteemed GSA Design Awards program. In all, 19 federal building projects nationwide were honored with 2022 GSA Design Awards, eight with Honor Awards and 11 with Citations.
Healthcare Facilities | Mar 22, 2023
New Jersey’s new surgical tower features state’s first intraoperative MRI system
Hackensack (N.J.) University Medical Center recently opened its 530,000-sf Helena Theurer Pavilion, a nine-story surgical and intensive care tower designed by RSC Architects and Page. The county’s first hospital, Hackensack University Medical Center, a 781-bed nonprofit teaching and research hospital, was founded in 1888.
Project + Process Innovation | Mar 22, 2023
Onsite prefabrication for healthcare construction: It's more than a process, it's a partnership
Prefabrication can help project teams navigate an uncertain market. GBBN's Mickey LeRoy, AIA, ACHA, LEED AP, explains the difference between onsite and offsite prefabrication methods for healthcare construction projects.
Geothermal Technology | Mar 22, 2023
Lendlease secures grants for New York’s largest geothermal residential building
Lendlease and joint venture partner Aware Super, one of Australia’s largest superannuation funds, have acquired $4 million in support from the New York State Energy Research and Development Authority to build a geoexchange system at 1 Java Street in Brooklyn. Once completed, the all-electric property will be the largest residential project in New York State to use a geothermal heat exchange system.
Women in Design+Construction | Mar 21, 2023
Two leading women in construction events unite in 2023
The new Women in Residential + Commercial Construction Conference (WIR+CC) will take place in Nashville, Tenn., October 25-27, 2023. Combining these two long-standing events aligns with our mission to create an event most impactful for women in the $1.4 trillion U.S. commercial and residential design and construction industry.