flexiblefullpage
billboard
interstitial1
catfish1
Currently Reading

ABC report: 'Confidence seems to be making a comeback in America'

Market Data

ABC report: 'Confidence seems to be making a comeback in America'

The Construction Confidence Index remained strong in February, according to the Associated Builders and Contractors.


By ABC | April 18, 2019
ABC report: 'Confidence seems to be making a comeback in America'

Photo by Engin Akyurt from Pexels

Construction industry leaders remained confident regarding nonresidential construction prospects in February 2019, according to the latest Construction Confidence Index released by Associated Builders and Contractors.

All three principal components measured by the survey—sales, profit margins, and staffing levels—remain well above the diffusion index threshold of 50, signaling ongoing expansion in construction activity. 

Only 3.4% of contractors expect to reduce staffing levels over the next six months, and more than 70% of survey respondents expect their sales to increase through the initial half of 2019. 

Still, 31.4% of contractors expect profit margins to remain unchanged, likely due in large measure to rising worker compensation costs.

Index breakdown:
• The CCI for sales expectations increased from 68.4 to 69.4 in February.
• The CCI for profit margin expectations increased from 60.6 to 63.3.
• The CCI for staffing levels increased from 68.2 to 68.5.

“Confidence seems to be making a comeback in America,” said ABC Chief Economist Anirban Basu. “There was a time when consumer, small business and investor confidence was falling. For now, that dynamic has evaporated, with job growth continuing and U.S. equity prices heading higher of late. Contractors understand the performance of the broader economy today helps shape the construction environment of tomorrow. Accordingly, with strong economic data like the Construction Backlog Indicator—which stood at 8.8 months in February 2019—and nonresidential construction spending, which increased 4.8% year over year, contractor confidence remains elevated.  

“That said, contractors continue to wrestle with ever-larger skilled workforce shortfalls, which are making it more difficult to deliver construction services on time and on budget,” said Basu. “This helps explain why the CCI reading for profit margins remains meaningfully lower than the corresponding reading for sales expectations. Despite expanding compensation costs, contractors expect to significantly increase staffing levels going forward, an indication that many busy contractors expect to get busier. The fact that the profit margin reading remains above 50 also suggests that contractors enjoy a degree of pricing power and are able to pass at least some of their higher costs along to customers. Slower growth in construction materials prices relative to last year represents another likely factor shaping survey results.”

CCI is a diffusion index. Readings above 50 indicate growth, while readings below 50 are unfavorable. 

Related Stories

Hotel Facilities | Jan 13, 2016

Hotel construction should remain strong through 2017

More than 100,000 rooms could be delivered this year alone.

Market Data | Jan 6, 2016

Census Bureau revises 10 years’ worth of construction spending figures

The largest revisions came in the last two years and were largely upward.

Market Data | Jan 5, 2016

Majority of AEC firms saw growth in 2015, remain optimistic for 2016: BD+C survey

By all indications, 2015 was another solid year for U.S. architecture, engineering, and construction firms.

Market Data | Jan 5, 2016

Nonresidential construction spending falters in November

Only 4 of 16 subsectors showed gains

Market Data | Dec 15, 2015

AIA: Architecture Billings Index hits another bump

Business conditions show continued strength in South and West regions.  

Market Data | Dec 7, 2015

2016 forecast: Continued growth expected for the construction industry

ABC forecasts growth in nonresidential construction spending of 7.4% in 2016 along with growth in employment and backlog.

boombox1
boombox2
native1

More In Category




halfpage1

Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021