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
Healthcare Facilities | Feb 11, 2015
Primer: Using 'parallel estimating' to pinpoint costs on healthcare construction projects
As pressure increases to understand capital cost prior to the first spade touching dirt, more healthcare owners are turning to advanced estimating processes, like parallel estimating, to improve understanding of exposure, writes CBRE Healthcare's Andrew Sumner.
Transportation & Parking Facilities | Feb 11, 2015
11 of the nation’s best ‘Complete Streets’ policies of 2014
Austin, Texas, and Troy, N.Y., are among the cities with the strongest safe streets policies, according to a new report.
Sponsored | Roofing | Feb 11, 2015
New school blends with local architecture using Petersen metal roof
Perkins Eastman in Stamford, Conn., designed the school to emphasize and integrate the International Baccalaureate curriculum throughout.
Mixed-Use | Feb 11, 2015
Developer plans to turn Eero Saarinen's Bell Labs HQ into New Urbanist town center
Designed by Eero Saarinen in the late 1950s, the two-million-sf, steel-and-glass building was one of the best-funded and successful corporate research laboratories in the world.
Architects | Feb 11, 2015
Shortlist for 2015 Mies van der Rohe Award announced
Copenhagen, Berlin, and Rotterdam are the cities where most of the shortlisted works have been built.
BIM and Information Technology | Feb 10, 2015
Google's 3D scanning camera leaves the lab
Google is said to be partnering with LG to create a version of the technology for public release sometime this year.
Steel Buildings | Feb 10, 2015
Korean researchers discover 'super steel'
The new alloy makes steel as strong as titanium.
Architects | Feb 9, 2015
The generalist architect vs. the specialist architect
The corporate world today quite often insists on hiring specialists, but the generalists have an intrinsic quality to adapt to new horizons or even cultural shifts in the market, writes SRG Partnership's Gary Harris.
Museums | Feb 9, 2015
Herzog & de Meuron's M+ museum begins construction in Hong Kong
When completed, M+ will be one of the first buildings in the Foster + Partners-planned West Kowloon Cultural District.
Multifamily Housing | Feb 9, 2015
GSEs and their lenders were active on the multifamily front in 2014
Fannie Mae and Freddie Mac securitized more than $57 billion for 850,000-plus units.