The nonresidential construction sector continues at a steady pace despite a slight decline, according to the FMI Nonresidential Construction Index Report (NRCI) for Q3 2015. The index reflects the observations of a sample of the nation's construction industry executives.
FMI’s NRCI for Q3 2015 dropped 1.3 points to 63.6 from the previous reading of 64.9 in Q2. While the NRCI component for the overall economy dropped 6.3 points to 70.6 points this quarter, which is down from its peak, this component still indicates that panelists remain bullish about the economy.
Similarly, indicators for the economies where panelists do the most business stood at 73.3, indicating a strong outlook despite a slight 3.4 points slip from last quarter.
Highlights from the NRCI point to diverse forces driving the industry as we enter the last quarter of the year:
- Panelists’ Construction Business. Panelists’ views on their businesses are solidly positive with little changed from the last quarter.
- Nonresidential Building Construction Market. Although the nonresidential building construction market where panelists do business slipped 1.4 points to 75.0, this NRCI component remains in the optimistic range.
- Expected Change in Backlog. The measure of expected change in backlog dropped 3.1 points this quarter to reach 68.8, while current backlog remains at a solid 10 months.
- Cost of Construction Materials and Labor. The cost of labor continues to rise, though not greatly changed from the last quarter, at 12.5. Materials costs continue to be high, but slightly lower than last quarter. Both labor and material costs act to hold down the overall NRCI as costs increase.
- Productivity Low. The productivity component stands at 47.6, the lowest since 2008. Executives surveyed report difficulties in maintaining productivity while squeezed by rising material and labor costs.
International Debt Impacts
The NRCI Q3 report tallies executives’ opinions on the potential impact of the Greek debt crisis on their businesses. A third of respondents indicated no immediate or long-term impact was likely for their businesses, 25% were unsure and only 2% surveyed expected they would have to adjust their strategic plans to deal with the uncertain economy.
Business Changes Since Recession
All sectors within the construction industry continue their recovery since the financial crisis, as companies make adjustments to their businesses in the intervening recession. The NRCI Q3 report summarizes how business adapted during the recession. Among the strategies employed, greater selectivity regarding projects and clients tops the list, followed closely by greater use of technology for their businesses to drive productivity, stronger risk management, heightened productivity, and incorporating global geopolitical and economic conditions in decision making.
The full report is available here.
Related Stories
Industrial Facilities | Jul 2, 2021
A new approach to cold storage buildings
Cameron Trefry and Kate Lyle of Ware Malcomb talk about their firm's cold storage building prototype that is serving a market that is rapidly expanding across the supply chain.
Contractors | Jul 1, 2021
Nonres construction spending down again in May
And the industry is still beset with labor and materials issues that could impede future growth
Multifamily Housing | Jun 30, 2021
A post-pandemic ‘new normal’ for apartment buildings
Grimm + Parker’s vision foresees buildings with rentable offices and refrigerated package storage.
Resiliency | Jun 24, 2021
Oceanographer John Englander talks resiliency and buildings [new on HorizonTV]
New on HorizonTV, oceanographer John Englander discusses his latest book, which warns that, regardless of resilience efforts, sea levels will rise by meters in the coming decades. Adaptation, he says, is the key to future building design and construction.
Multifamily Housing | Jun 23, 2021
COVID-19’s impact on multifamily amenities
Multifamily project teams had to scramble to accommodate the overwhelming demand for work-from-home spaces for adults and study spaces for children.
Contractors | Jun 22, 2021
McCarthy Building Companies taps the military for potential new hires
The contractor can now recruit through the Army’s Youth Success program
K-12 Schools | Jun 20, 2021
Los Angeles County issues design guidelines for extending PreK-12 learning to the outdoors
The report covers everything from funding and site prep recommendations to whether large rocks can be used as seating.
Hotel Facilities | Jun 18, 2021
Adaptive reuse for hospitality, with Frank Cretella of Landmark Developers
In an exclusive interview for HorizonTV, Landmark Developers' President Frank Cretella talks about the firm's adaptive reuse projects for the hospitality sector. Cretella outlines his company's keys to success in hospitality development, including finding unique properties and creating memorable spaces.
Wood | Jun 10, 2021
Three AEC firms launch a mass timber product for quicker school construction
TimberQuest brand seeks to avoid overinvestment in production that has plagued other CLT providers.
Office Buildings | Jun 10, 2021
The future of the workplace is social clubs
Office design experts from NELSON Worldwide propose a new concept for the workplace, one that resembles the social clubs of the past.