Construction industry leaders remained confident regarding the nonresidential construction sector’s prospects during January 2019, according to the latest Construction Confidence Index recently released by Associated Builders and Contractors.
Expectations for sales during the coming six-month period remained especially upbeat in January, with nearly 70% of respondents anticipating an increase in sales levels. A similar level of confidence characterizes contractors expectations on future staffing levels, with fewer than 7% of contractors indicating expectations of shrinking workforces.
While contractors became fractionally less confident regarding profit margins, more than half of respondents still expect their margins to increase in coming months, while less than 13% expect margins to shrink. 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.
– The CCI for sales expectations increased from 67.2 to 68.4 in January.
– The CCI for profit margin expectations fell from 60.6 to 60.5.
– The CCI for staffing levels increased from 66.2 to 68.2.
“Indications of ongoing confidence in the construction sector have become more important," said ABC Chief Economist Anirban Basu. “Recent dips in consumer and small-business confidence have become a source of concern, as have weak reports regarding employment growth and retail sales. Thankfully, contractors continue to exhibit elevated levels of confidence regarding the near-term trajectory of the economy despite ongoing workforce shortages. Not only do contractors expect to further expand staffing levels, many continue to expect rising profit margins despite rapidly expanding payroll expenses.
“One source of relief has been a recent moderation in construction materials prices,” said Basu. “With the global economy continuing to soften, materials prices should remain well-behaved over the months to come. Investors continue to aggressively seek ways to deploy capital, including on new commercial construction. This helps explain a recent surge in the Architecture Billings Index, another leading indicator that, along with CCI, suggests ongoing economic momentum throughout the first half of 2019.”
CCI is a diffusion index. Readings above 50 indicate growth, while readings below 50 are unfavorable.
[Editor’s note: ABC’s Construction Confidence Index will be reported monthly beginning with January 2019 data. This is the first monthly CCI release.]
Related Stories
Self-Storage Facilities | Jan 25, 2024
One-quarter of self-storage renters are Millennials
Interest in self-storage has increased in over 75% of the top metros according to the latest StorageCafe survey of self-storage preferences. Today, Millennials make up 25% of all self-storage renters.
Industry Research | Jan 23, 2024
Leading economists forecast 4% growth in construction spending for nonresidential buildings in 2024
Spending on nonresidential buildings will see a modest 4% increase in 2024, after increasing by more than 20% last year according to The American Institute of Architects’ latest Consensus Construction Forecast. The pace will slow to just over 1% growth in 2025, a marked difference from the strong performance in 2023.
Construction Costs | Jan 22, 2024
Construction material prices continue to normalize despite ongoing challenges
Gordian’s most recent Quarterly Construction Cost Insights Report for Q4 2023 describes an industry still attempting to recover from the impact of COVID. This was complicated by inflation, weather, and geopolitical factors that resulted in widespread pricing adjustments throughout the construction materials industries.
Hotel Facilities | Jan 22, 2024
U.S. hotel construction is booming, with a record-high 5,964 projects in the pipeline
The hotel construction pipeline hit record project counts at Q4, with the addition of 260 projects and 21,287 rooms over last quarter, according to Lodging Econometrics.
Multifamily Housing | Jan 15, 2024
Multifamily rent growth rate unchanged at 0.3%
The National Multifamily Report by Yardi Matrix highlights the highs and lows of the multifamily market in 2023. Despite strong demand, rent growth remained unchanged at 0.3 percent.
Self-Storage Facilities | Jan 5, 2024
The state of self-storage in early 2024
As the housing market cools down, storage facilities suffer from lower occupancy and falling rates, according to the December 2023 Yardi Matrix National Self Storage Report.
Designers | Dec 25, 2023
Redefining the workplace is a central theme in Gensler’s latest Design Report
The firm identifies eight mega trends that mostly stress human connections.
Contractors | Dec 12, 2023
The average U.S. contractor has 8.5 months worth of construction work in the pipeline, as of November 2023
Associated Builders and Contractors reported today that its Construction Backlog Indicator inched up to 8.5 months in November from 8.4 months in October, according to an ABC member survey conducted Nov. 20 to Dec. 4. The reading is down 0.7 months from November 2022.
Market Data | Nov 27, 2023
Number of employees returning to the office varies significantly by city
While the return-to-the-office trend is felt across the country, the percentage of employees moving back to their offices varies significantly according to geography, according to Eptura’s Q3 Workplace Index.
Market Data | Nov 14, 2023
The average U.S. contractor has 8.4 months worth of construction work in the pipeline, as of September 2023
Associated Builders and Contractors reported that its Construction Backlog Indicator declined to 8.4 months in October from 9.0 months in September, according to an ABC member survey conducted from Oct. 19 to Nov. 2. The reading is down 0.4 months from October 2022. Backlog now stands at its lowest level since the first quarter of 2022.