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
| Aug 16, 2022
DOE funds 18 projects developing tech to enable buildings to store carbon
The Department of Energy announced $39 million in awards for 18 projects that are developing technologies to transform buildings into net carbon storage structures.
| Aug 16, 2022
Multifamily holds strong – for now
All leading indicators show that the multifamily sector is shrugging off rising interest rates, inflationary pressures and other economic challenges, and will continue to be a torrid market for design and construction firms for at least the rest of 2022.
| Aug 16, 2022
Cedars-Sinai Urgent Care Clinic’s high design for urgent care
The new Cedars-Sinai Los Feliz Urgent Care Clinic in Los Angeles plays against type, offering a stylized design to what are typically mundane, utilitarian buildings.
| Aug 15, 2022
IF you build it, will they come? The problem of staff respite in healthcare facilities
Architects and designers have long argued for the value of respite spaces in healthcare facilities.
| Aug 15, 2022
Boston high-rise will be largest Passive House office building in the world
Winthrop Center, a new 691-foot tall, mixed-use tower in Boston was recently honored with the Passive House Trailblazer award.
| Aug 12, 2022
Monthly Construction Input Prices Decreased 2% in July, Up 17% From a Year Ago, Says ABC
Construction input prices decreased 1.8% in July compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data released today.
Hotel Facilities | Aug 12, 2022
Denver builds the nation’s first carbon-positive hotel
Touted as the nation’s first carbon-positive hotel, Populus recently broke ground in downtown Denver.
| Aug 11, 2022
Report examines supposed conflict between good design and effective cost management
A report by the American Institute of Architects and the Associated General Contractors of America takes a look at the supposed conflict between good design and effective cost management, and why it causes friction between architects and contractors.
Energy Efficiency | Aug 11, 2022
Commercial Energy Efficiency: Finally “In-the-Money!”
By now, many business leaders are out in front of policymakers on prioritizing the energy transition.
High-rise Construction | Aug 11, 2022
Saudi Arabia unveils plans for a one-building city stretching over 100 miles long
Saudi Arabia recently announced plans for an ambitious urban project called The Line—a one-building city in the desert that will stretch 170 kilometers (106 miles) long and only 200 meters (656 feet) wide.
