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Construction Contractors' Outlook Remains Bright

All three principal components measured by the survey—sales, profit margins, and staffing levels—remain in expansion mode.

Despite ongoing concerns about skilled worker shortages and volatile materials prices, construction executives remain bullish about the prospects for the nonresidential construction sector, according to Associated Builders and Contractors’ April 2019 Construction Confidence Index.

All three principal components measured by the survey—sales, profit margins, and staffing levels—remain well above the CCI’s diffusion index threshold of 50, signaling ongoing expansion in construction activity. While contractors are slightly less upbeat regarding sales expectations and staffing levels than in March, more than 70% of contractors expect sales to increase over the next six months, a reflection of continued elevated demand for construction services.

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Consistent with last month’s reading, more than 56% of survey respondents anticipate rising profit margins, an indication that users of construction services remain willing to pay more to get projects delivered despite rising wages and other cost pressures.

•             The CCI for sales expectations fell from 69.6 to 68.4 in April.

•             The CCI for profit margin expectations increased from 61.8 to 63.0.

•             The CCI for staffing levels fell from 67.8 to 67.4.

“Many economists are convinced that the next recession will begin next year,” said ABC Chief Economist Anirban Basu. “While that is a possibility, there are presently no signs of recession in the nonresidential portion of the economy, as backlog remains elevated and demand for construction services continue to rise, especially in public construction segments such as water supply, flood control and highway/street."

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