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Construction Contractors’ Confidence Holds Steady in May

Fresh into the dog days of summer, the U.S. construction industry is assessing contractors' confidence levels for nonresidential construction. According to Associated Builders and Contractors' (ABC) latest Construction Confidence Index (CCI) results in May, contractors are optimistic about sales expectations in the near future, yet show some uncertainty regarding profit margin expectations and staffing levels.

On July 18, ABC released its findings comparing April's sales expectations, profit margin expectations and staffing levels with those in May—scores above 50 signify growth. While contractors' sales expectations rose from 68.4 to 70 in May, profit margin expectations and staffing levels fell from 63 to 62.8 and 67.4 to 66.8, respectively.

"These CCI measures likely declined due to economic strength rather than weakness," ABC Chief Economist Anirban Basu said in the report. "Firms continue to scramble for talent in the context of an economy offering more job openings than jobseekers. As a result, staffing levels cannot rise rapidly even in the context of elevated demand for workers, and profit margins are negatively impacted by the accompanying rapid rise in compensation costs. However, far more industry leaders expect profit margins to rise than decline."

The majority of contractors said sales expectations were up small (56%); however, nearly 17% said they were up big—a nearly 3% increase over April's expectations. Compared to April's findings, the majority of contractors in May said profit margins and staffing levels were up small, more than a quarter of respondents indicating there was no change in either expectations.

—Andrew Michaels, editorial associate

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Friday, 23 August 2019