Confidence among U.S. construction industry leaders held steady in December 2019 after surging in November, according to the Associated Builders and Contractors Construction Confidence Index released today. The average American contractor entered 2020 with confidence: Sales expectations, profit margins and staffing levels all remained above the growth expectations threshold, indicating a strong start to 2020.
70% of contractors expect their sales to increase over the first half of 2020, while nearly the same percentage of contractors expect to increase their staffing levels. Nearly half of contractors expect their profit margins to increase, while just 12% expect them to decline over the next two quarters.
- The CCI for sales expectations decreased from 69.5 to 68.8 in December.
- The CCI for profit margin expectations decreased from 61.3 to 60.
- The CCI for staffing levels increased from 66.9 to 67.2
“The U.S. economy is humming, and among the principal beneficiaries of that performance are nonresidential contractors,” said ABC Chief Economist Anirban Basu. “Sales expectations, despite inching a bit lower in December, remain especially robust, with seven in 10 survey respondents expecting sales increases and fewer than one in 10 expecting their sales to decline during the first half of 2020. Recently released data regarding construction spending and hiring in the U.S. strongly suggest that this confidence is justified. ABC’s Construction Backlog Indicator dipped in December but still indicates that contractors remain busy.
“Despite broad optimism regarding sales prospects, contractors’ expectations are somewhat more subdued regarding profit margins,” said Basu. “Though materials prices have been generally stable and energy prices have declined recently, workers are becoming more expensive, both in terms of wages and benefits. Shortfalls in the skilled trades are apparent throughout the nation, especially in the booming markets of the South and West. With U.S. unemployment hovering near a 50-year low, many construction workers may find opportunities in other segments, including logistics, and retirement rates remain elevated. All of this translates into ongoing increases in compensation costs and a squeeze on margins.”
CCI is a diffusion index. Readings above 50 indicate growth, while readings below 50 are unfavorable.
Related Stories
Market Data | Sep 29, 2020
6 must reads for the AEC industry today: September 29, 2020
Renovation to Providence's downtown library is completed and Amazon to build 1,500 new last-mile warehouses.
Market Data | Sep 25, 2020
5 must reads for the AEC industry today: September 25, 2020
AIA releases latest 2030 Commitment results and news delivery robots could generate trillions for U.S. economy.
Market Data | Sep 24, 2020
6 must reads for the AEC industry today: September 24, 2020
SOM's new waterfront neighborhood and a portable restroom designed for mobility.
Market Data | Sep 23, 2020
Architectural billings in August still show little sign of improvement
The pace of decline during August remained at about the same level as in July and June.
Market Data | Sep 23, 2020
7 must reads for the AEC industry today: September 23, 2020
The new Theodore Presidential Library and the AIA/HUD's Secretary's Awards honor affordable, accessible housing.
Market Data | Sep 22, 2020
6 must reads for the AEC industry today: September 22, 2020
Construction employment declined in 39 states and no ease of lumber prices in sight.
Market Data | Sep 21, 2020
Washington is the US state with the most value of construction projects underway, says GlobalData
Of the top 10 largest projects in the Washington state, nine were in the execution stage as of August 2020.
Market Data | Sep 21, 2020
Construction employment declined in 39 states between August 2019 and 2020
31 states and DC added jobs between July and August.
Market Data | Sep 21, 2020
6 must reads for the AEC industry today: September 21, 2020
Four projects receive 202 AIA/ALA Library Building Award and Port San Antonio's new Innovation Center.
Market Data | Sep 18, 2020
Follow up survey of U.S. code officials demonstrates importance of continued investment in virtual capabilities
Existing needs highlight why supporting building and fire prevention departments at the federal, state, and local levels is critical.