U.S. construction industry leaders remained upbeat regarding nonresidential construction’s near-term prospects in May 2019, according to the Construction Confidence Index released today by Associated Builders and Contractors.
While contractors were slightly less upbeat regarding profit margins and staffing levels compared to April, all three principal components measured by the survey—sales, profit margins and staffing levels—remain well above the diffusion index threshold of 50 in May. Nearly 73% of contractors expect sales to rise during the next six months and 68% expect staffing levels to increase further.
- The CCI for sales expectations increased from 68.4 to 70.0 in May.
- The CCI for profit margin expectations fell slightly from 63.0 to 62.8.
- The CCI for staffing levels fell from 67.4 to 66.8.
“While there continues to be considerable chatter regarding a slowing economy, the need for federal rate cuts and the damaging effects of ongoing trade disputes involving the United States, China, the European Union and India, among others, nonresidential firm leaders continue to expect further construction spending growth,” said ABC Chief Economist Anirban Basu. “Recent data regarding job growth and consumer spending indicate that any economic slowing to date has been mild and that the expansion is set to endure for the next few quarters.
“While profit margin expectations and staffing levels measures declined slightly in May, they remained well above the threshold level of 50,” said Basu. “More importantly, these CCI measures likely declined due to economic strength rather than weakness. Firms continue to scramble for talent in the context of an economy offering more job openings than jobseekers. As a result, staffing levels cannot rise rapidly even in the context of elevated demand for workers, and profit margins are negatively impacted by the accompanying rapid rise in compensation costs. However, far more industry leaders expect profit margins to rise than decline.
“As we reach the longest economic expansion in American history, recent construction spending data indicate that much of the momentum is coming from public projects,” said Basu. “Years of growth have helped to stabilize state and local government finances, resulting in more money available to fund transportation, water, public safety and other projects. While spending in certain private segments has been expanding less rapidly of late, this nascent weakness has been more than fully countervailed by the strength of investment in infrastructure.”
CCI is a diffusion index. Readings above 50 indicate growth, while readings below 50 are unfavorable.
.jpg%3Fver%3D2019-07-18-104421-307&I=20190718150919.0000053f0b67%40mail6-60-usnbn1&X=MHwxMDQ2NzU4OjVkMzA3OTVhZDdkNzRjY2IwYWNjM2ViYzs%3D&S=cVBNKOEoq6MUK-bwGgOO7KJ8uiyNh3t6BAKLaMNS0L0)
Related Stories
Market Data | May 10, 2018
Construction costs surge in April as new tariffs and other trade measures lead to significant increases in materials prices
Association officials warn that the new tariffs and resulting price spikes have the potential to undermine benefits of tax and regulatory reform, urge administration to reconsider.
Market Data | May 7, 2018
Construction employers add 17,000 jobs in April and 257,000 for the year
Unemployment rate for construction increases slightly compared to year earlier as higher pay levels appears to be attracting people with recent construction experience back into the workforce.
Market Data | May 2, 2018
Construction employment increases in 245 metro areas between March 2017 & 2018, as trade fights & infrastructure funding shortfalls loom
Houston-The Woodlands-Sugar Land, Texas and Weirton-Steubenville, W.Va.-Ohio experience largest year-over-year gains; Baton Rouge, La. and Auburn-Opelika, Ala. have biggest annual declines.
Market Data | May 2, 2018
Nonresidential Construction down in March, private sector falters, public sector unchanged
February’s spending estimate was revised roughly $10 billion higher.
Market Data | Apr 30, 2018
Outlook mixed for renewable energy installations in Middle East and Africa region
Several major MEA countries are actively supporting the growth of renewable energy.
Market Data | Apr 12, 2018
Construction costs climb in March as wide range of input costs jump
Association officials urge Trump administration, congress to fund infrastructure adequately as better way to stimulate demand than tariffs that impose steep costs on contractors and project owners.
Market Data | Apr 9, 2018
Construction employers add 228,000 jobs over the year despite dip in March
Average hourly earnings increase to $29.43 in construction, topping private sector by nearly 10%; Association officials urge updating and better funding programs to train workers for construction jobs.
Market Data | Apr 4, 2018
Construction employment increases in 257 metro areas between February 2017 & 2018 as construction firms continue to expand amid strong demand
Riverside-San Bernardino-Ontario, Calif. and Merced, Calif. experience largest year-over-year gains; Baton Rouge, La. and Auburn-Opelika, Ala. have biggest annual declines in construction employment.
Market Data | Apr 2, 2018
Construction spending in February inches up from January
Association officials urge federal, state and local officials to work quickly to put recently enacted funding increases to work to improve aging and over-burdened infrastructure, offset public-sector spending drops.
Market Data | Mar 29, 2018
AIA and the University of Minnesota partner to develop Guides for Equitable Practice
The Guides for Equitable Practice will be developed and implemented in three phase.
