Uncertainty about government spending clouds an otherwise positive economic outlook among 59 middle market construction firms polled recently by GE Capital.
Those firms—which average 652 employees and $144.6 million in annual revenue—are particularly confident about U.S. and local markets, though less so about the global arena. Only 12% of those polled said they were “extremely confident” about the condition of global economies, versus 21% who felt the same way about the U.S. economy, and 42% who liked what they were seeing about their local economies.
The firms’ confidence reflects their financial performance. Seven of 10 respondents reported improvements in their companies’ financials as of September 2014, versus fewer than three in five polled last March.
However, while half of the construction firms surveyed said they were hiring more people, the number was slightly down from the 57% who were hiring last March. The good news is that nearly half of the firms polled—47%—expect the construction industry to expand through September 2015, during which construction-related employment is expected to increase by 5.4%.
The survey’s respondents see the energy sector as holding out the greatest potential for future construction projects and hiring. Office and residential projects are also expected to be stronger. But a lot of these firms’ optimism seems contingent on public works spending, which “continues to have an immense impact on the industry and is a key consideration in expenditure decisions,” according to GE Capital.
Another factor that is likely to impact construction firms’ profitability is the direction that healthcare costs take. One-third of respondents are anticipating an increasing cost structure. Still, the respondents expect their margins to grow by average of 3.7% over the next year, which greatly exceeds the 0.2% growth that respondents were projecting last March.
GE Capital produces its quarterly surveys in cooperation with the National Center for the Middle Market, a multiyear partnership between GE Capital and Ohio State University’s Fisher College of Business. For more information about construction and other industries, visit gecapital.com/cxosurvey.
Related Stories
Sports and Recreational Facilities | Jul 18, 2016
Turner and AECOM will build the Los Angeles Rams’ new multi-billion dollar stadium project
The 70,000-seat stadium will be ready by the 2019 NFL season. The surrounding mixed-use development includes space for retail, hotels, and public parks.
High-rise Construction | Jul 15, 2016
Zaha Hadid designs geometric flower-shaped tower for sustainable Qatar city
The 38-story building will have a mashrabiya latticed facade with hotel and residential space inside.
Building Team | Jul 11, 2016
Design-assist: The way to really fly [AIA course]
Experts explain the benefits of DA, a process where the subcontractors are retained to assist other Building Team members in the development of a design. Earn 1.0 AIA CES learning units by reading and taking the exam.
Building Team | Jul 11, 2016
Addressing client concerns about design-assist
Common concerns about DA include lack of familiarity, obtaining competitive pricing, and design liability.
Sponsored | Building Team | Jul 11, 2016
Construction Disruption at AECX: Technology, hackathons and the promise of change in LA
The lead up to AECX featured a discussion providing insight into the current state of the AEC technological revolution by exploring opportunities, challenges and choices AEC pros face.
Green | Jul 1, 2016
Perkins Eastman pledges to use EDGE green building system for five upcoming international projects
The firm will partner with the International Finance Corporation to promote sustainable building in emerging markets like India and China.
Healthcare Facilities | Jul 1, 2016
AIA releases summary of the 2016 Design and Health Research Consortium
Consortium members discussed how architects, designers, and health professionals can best apply design and health research in their communities.
Architects | Jun 30, 2016
The year's best small projects include a floating sauna, dental trailer, and smocked porch
AIA chose the 2016 recipients of the Small Project Awards. Every entry cost less than $1.5 million to build, with one as low as $900.
Architects | Jun 29, 2016
AIA: Healthy demand for all building types signaled in Architecture Billings Index
Recent client interest could signal resurgence for institutional market. May's ABI score was the highest mark in nearly a year.
Architects | Jun 28, 2016
5 easy ways architects can increase their profits
Whitehorn Financial Managing Principal Steve Whitehorn offers effective ways to recoup lost revenue, including a few strategies that capitalize on recent changes to the federal tax code.