The latest Construction Confidence Index shows construction industry leaders remained confident in August regarding the nonresidential construction sector’s future, according to www.abc.org.
Although contractors were less optimistic about sales, confidence increased regarding profit margins and staffing levels, and all three components were well above the diffusion index threshold of 50. Nearly 63% of respondents expect sales to increase during the next six months. Additionally, more than 50% of contractors expect profit margins to expand, and about three in five contractors expect staffing levels to expand.
In August, the CCI decreased from 64.8 to 63.9 for sales expectations; increased from 60 to 60.8 for profit margin expectations; and increased from 63.3 to 64 for staffing levels.
“Consistent with a healthy backlog and substantial demand coming from infrastructure-related projects, the overall sentiment among U.S. nonresidential contractors remains positive,” says ABC Chief Economist Anirban Basu. “While many economists are predicting the onset of recession over the next 12 to 24 months, the probability of a near-term recession in the economy’s nonresidential construction sector remains scant.
“That said, there is evidence of growing weakness in certain parts of the nation with respect to commercial activity,” Basu continues. “The Architecture Billings Index and other economic indicators suggest some slowing in commercial construction, in part because of growing concerns regarding saturation in certain markets like office and lodging. The recent softening of industrial activity also helps explain why contractors were not quite as confident about sales expectations in August compared to July.”
