Construction forecast

Optimism Slips in Q3 Construction Market

Approximately three in four construction firms expect that sales will continue to rise over the next six months and closer to one in 10 expect sales to decline.

Construction industry leaders remained confident in the third quarter of 2018 but their optimism slipped relative to the second quarter, according to the latest Construction Confidence Index released by Associated Builders and Contractors, Washington, DC. Approximately three in four construction firms expect that sales will continue to rise over the next six months and closer to one in 10 expect sales to decline over the next two quarters.

Though many firms expect to become even busier, fewer than six in 10 contractors expect profit margins to increase, a reflection of rising human capital, materials prices and other input costs. Despite rising labor costs, seven in 10 contractors expect to bolster staffing levels through the end of the first quarter of 2019, AGC said in a release.

“Growing concerns among construction executives are not attributable to a sense that construction spending will decline anytime soon. A variety of indicators, including ABC’s Construction Backlog Indicator, suggest that the average U.S. contractor stands to become a bit busier during the months ahead,” said ABC Chief Economist Anirban Basu. “This is consistent with the CCI indicating that the average survey respondent anticipates both sales growth and more employees in early 2019.”

All three key components measured by the CCI survey—sales, profit margins, and staffing levels—remain well above the diffusion index threshold of 50, signaling ongoing expansion in construction activity along multiple dimensions.

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