The latest Construction Confidence Index shows construction industry leaders were less optimistic in September regarding the nonresidential construction sector’s future, according to www.abc.org.
Although contractors were less confident about sales, profit margins and staffing levels, all three components were well above the diffusion index threshold of 50. Less than 50% of respondents expect profit margins to increase during the next six months. Additionally, 58% of contractors expect sales to expand, and more than 60% of contractors expect staffing levels to expand.
In September, the CCI decreased from 63.9 to 62.4 for sales expectations and 60.8 to 58.5 for profit margin expectations. The CCI increased from 64 to 64.2 for staffing levels.
“While the economy has been softening over the last six to eight months, little of that is apparent in the labor market, which is still associated with rising compensation, miniscule unemployment and abundant numbers of available, unfilled jobs,” says ABC Chief Economist Anirban Basu. “Many contractors are still securing plenty of work but are increasingly suffering difficulty finding the people needed to complete that work. The result is rapidly rising compensation costs, including in the form of overtime, which has served to suppress expectations for industry profit margins.
“Despite these dynamics, only one in six contractors expect margins to decline over the next six months,” Basu continues. “What’s more, industry employment continues to expand as the average firm works ever harder to secure talent. Fewer than one in 10 contractors anticipate that staffing levels will slip over the near term. But with the proportion of unfilled construction jobs at an all-time high, some firms that expect margins to continue to expand may be in for a bit of a surprise.”
