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 | Jul 23, 2019
Despite signals of impending declines, continued growth in nonresidential construction is expected through 2020
AIA’s latest Consensus Construction Forecast predicts growth.
Market Data | Jul 20, 2019
Construction costs continued to rise in second quarter
Labor availability is a big factor in that inflation, according to Rider Levett Bucknall report.
Market Data | Jul 18, 2019
Construction contractors remain confident as summer begins
Contractors were slightly less upbeat regarding profit margins and staffing levels compared to April.
Market Data | Jul 17, 2019
Design services demand stalled in June
Project inquiry gains hit a 10-year low.
Market Data | Jul 16, 2019
ABC’s Construction Backlog Indicator increases modestly in May
The Construction Backlog Indicator expanded to 8.9 months in May 2019.
K-12 Schools | Jul 15, 2019
Summer assignments: 2019 K-12 school construction costs
Using RSMeans data from Gordian, here are the most recent costs per square foot for K-12 school buildings in 10 cities across the U.S.
Market Data | Jul 12, 2019
Construction input prices plummet in June
This is the first time in nearly three years that input prices have fallen on a year-over-year basis.
Market Data | Jul 1, 2019
Nonresidential construction spending slips modestly in May
Among the 16 nonresidential construction spending categories tracked by the Census Bureau, five experienced increases in monthly spending.
Market Data | Jul 1, 2019
Almost 60% of the U.S. construction project pipeline value is concentrated in 10 major states
With a total of 1,302 projects worth $524.6 billion, California has both the largest number and value of projects in the U.S. construction project pipeline.
Market Data | Jun 21, 2019
Architecture billings remain flat
AIA’s Architecture Billings Index (ABI) score for May showed a small increase in design services at 50.2.