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 | Oct 24, 2016
New construction starts in 2017 to increase 5% to $713 billion
Dodge Outlook Report predicts moderate growth for most project types – single family housing, commercial and institutional building, and public works, while multifamily housing levels off and electric utilities/gas plants decline.
High-rise Construction | Oct 21, 2016
The world’s 100 tallest buildings: Which architects have designed the most?
Two firms stand well above the others when it comes to the number of tall buildings they have designed.
Market Data | Oct 19, 2016
Architecture Billings Index slips consecutive months for first time since 2012
“This recent backslide should act as a warning signal,” said AIA Chief Economist, Kermit Baker.
Market Data | Oct 11, 2016
Building design revenue topped $28 billion in 2015
Growing profitability at architecture firms has led to reinvestment and expansion
Market Data | Oct 4, 2016
Nonresidential spending slips in August
Public sector spending is declining faster than the private sector.
Industry Research | Oct 3, 2016
Structure Tone survey shows cost is still a major barrier to building green
Climate change, resilience and wellness are also growing concerns.
Industry Research | Sep 27, 2016
Sterling Risk Sentiment Index indicates risk exposure perception remains stable in construction industry
Nearly half (45%) of those polled say election year uncertainty has a negative effect on risk perception in the construction market.
Market Data | Sep 22, 2016
Architecture Billings Index slips, overall outlook remains positive
Business conditions are slumping in the Northeast.
Market Data | Sep 20, 2016
Backlog skyrockets for largest firms during second quarter, but falls to 8.5 months overall
While a handful of commercial construction segments continue to be associated with expanding volumes, for the most part, the average contractor is no longer getting busier, says ABC Chief Economist Anirban Basu.
Designers | Sep 13, 2016
5 trends propelling a new era of food halls
Food halls have not only become an economical solution for restauranteurs and chefs experiencing skyrocketing retail prices and rents in large cities, but they also tap into our increased interest in gourmet locally sourced food, writes Gensler's Toshi Kasai.
