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.Â
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.Â
[Editor’s note: ABC’s Construction Confidence Index will be reported monthly beginning with January 2019 data. This is the first monthly CCI release.]
Â
Related Stories
Market Data | Jun 19, 2018
ABC’s Construction Backlog Indicator remains elevated in first quarter of 2018
The CBI shows highlights by region, industry, and company size.
Market Data | Jun 19, 2018
America’s housing market still falls short of providing affordable shelter to many
The latest report from the Joint Center for Housing Studies laments the paucity of subsidies to relieve cost burdens of ownership and renting.
Market Data | Jun 18, 2018
AI is the path to maximum profitability for retail and FMCG firms
Leading retailers including Amazon, Alibaba, Lowe’s and Tesco are developing their own AI solutions for automation, analytics and robotics use cases.Â
Market Data | Jun 12, 2018
Yardi Matrix report details industrial sector's strength
E-commerce and biopharmaceutical companies seeking space stoke record performances across key indicators.
Market Data | Jun 8, 2018
Dodge Momentum Index inches up in May
May’s gain was the result of a 4.7% increase by the commercial component of the Momentum Index.
Market Data | Jun 4, 2018
Nonresidential construction remains unchanged in April
Private sector spending increased 0.8% on a monthly basis and is up 5.3% from a year ago.
Market Data | May 30, 2018
Construction employment increases in 256 metro areas between April 2017 & 2018
Dallas-Plano-Irving and Midland, Texas experience largest year-over-year gains; St. Louis, Mo.-Ill. and Bloomington, Ill. have biggest annual declines in construction employment amid continuing demand.
Market Data | May 29, 2018
America’s fastest-growing cities: San Antonio, Phoenix lead population growth
San Antonio added 24,208 people between July 2016 and July 2017, according to U.S. Census Bureau data.
Market Data | May 25, 2018
Construction group uses mobile technology to make highway work zones safer
Mobile advertising campaign urges drivers who routinely pass through certain work zones to slow down and be alert as new data shows motorists are more likely to be injured than construction workers.
Market Data | May 23, 2018
Architecture firm billings strengthen in April
Firms report solid growth for seven straight months.