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
Multifamily Housing | Jul 27, 2017
Apartment market index: Business conditions soften, but still solid
Despite some softness at the high end of the apartment market, demand for apartments will continue to be substantial for years to come, according to the National Multifamily Housing Council.
Market Data | Jul 25, 2017
What's your employer value proposition?
Hiring and retaining talent is one of the top challenges faced by most professional services firms.
Market Data | Jul 25, 2017
Moderating economic growth triggers construction forecast downgrade for 2017 and 2018
Prospects for the construction industry have weakened with developments over the first half of the year.
Industry Research | Jul 6, 2017
The four types of strategic real estate amenities
From swimming pools to pirate ships, amenities (even crazy ones) aren’t just perks, but assets to enhance performance.
Market Data | Jun 29, 2017
Silicon Valley, Long Island among the priciest places for office fitouts
Coming out on top as the most expensive market to build out an office is Silicon Valley, Calif., with an out-of-pocket cost of $199.22.
Market Data | Jun 26, 2017
Construction disputes were slightly less contentious last year
But poorly written and administered contracts are still problems, says latest Arcadis report.
Industry Research | Jun 26, 2017
Time to earn an architecture license continues to drop
This trend is driven by candidates completing the experience and examination programs concurrently and more quickly.
Industry Research | Jun 22, 2017
ABC's Construction Backlog Indicator rebounds in 2017
The first quarter showed gains in all categories.
Market Data | Jun 21, 2017
Design billings maintain solid footing, strong momentum reflected in project inquiries/design contracts
Balanced growth results in billings gains in all sectors.
Market Data | Jun 16, 2017
Residential construction was strong, but not enough, in 2016
The Joint Center for Housing Studies’ latest report expects minorities and millennials to account for the lion’s share of household formations through 2035.
