The nonresidential construction sector continues at a steady pace despite a slight decline, according to the FMI Nonresidential Construction Index Report (NRCI) for Q3 2015. The index reflects the observations of a sample of the nation's construction industry executives.
FMI’s NRCI for Q3 2015 dropped 1.3 points to 63.6 from the previous reading of 64.9 in Q2. While the NRCI component for the overall economy dropped 6.3 points to 70.6 points this quarter, which is down from its peak, this component still indicates that panelists remain bullish about the economy.
Similarly, indicators for the economies where panelists do the most business stood at 73.3, indicating a strong outlook despite a slight 3.4 points slip from last quarter.
Highlights from the NRCI point to diverse forces driving the industry as we enter the last quarter of the year:
- Panelists’ Construction Business. Panelists’ views on their businesses are solidly positive with little changed from the last quarter.
- Nonresidential Building Construction Market. Although the nonresidential building construction market where panelists do business slipped 1.4 points to 75.0, this NRCI component remains in the optimistic range.
- Expected Change in Backlog. The measure of expected change in backlog dropped 3.1 points this quarter to reach 68.8, while current backlog remains at a solid 10 months.
- Cost of Construction Materials and Labor. The cost of labor continues to rise, though not greatly changed from the last quarter, at 12.5. Materials costs continue to be high, but slightly lower than last quarter. Both labor and material costs act to hold down the overall NRCI as costs increase.
- Productivity Low. The productivity component stands at 47.6, the lowest since 2008. Executives surveyed report difficulties in maintaining productivity while squeezed by rising material and labor costs.
International Debt Impacts
The NRCI Q3 report tallies executives’ opinions on the potential impact of the Greek debt crisis on their businesses. A third of respondents indicated no immediate or long-term impact was likely for their businesses, 25% were unsure and only 2% surveyed expected they would have to adjust their strategic plans to deal with the uncertain economy.
Business Changes Since Recession
All sectors within the construction industry continue their recovery since the financial crisis, as companies make adjustments to their businesses in the intervening recession. The NRCI Q3 report summarizes how business adapted during the recession. Among the strategies employed, greater selectivity regarding projects and clients tops the list, followed closely by greater use of technology for their businesses to drive productivity, stronger risk management, heightened productivity, and incorporating global geopolitical and economic conditions in decision making.
The full report is available here.
Related Stories
Adaptive Reuse | Apr 15, 2021
The Weekly Show, Apr 15, 2021: The ins and outs of adaptive reuse, and sensors for real-time construction monitoring
This week on The Weekly show, BD+C editors speak with AEC industry leaders from PBDW Architects and Wohlsen Construction about what makes adaptive reuse projects successful, and sensors for real-time monitoring of concrete construction.
Contractors | Apr 9, 2021
Construction bidding activity ticks up in February
The Blue Book Network's Velocity Index measures month-to-month changes in bidding activity among construction firms across five building sectors and in all 50 states.
Industry Research | Apr 9, 2021
BD+C exclusive research: What building owners want from AEC firms
BD+C’s first-ever owners’ survey finds them focused on improving buildings’ performance for higher investment returns.
Multifamily Housing | Mar 30, 2021
Bipartisan ‘YIMBY’ bill would provide $1.5B in grants to spur new housing
Resources for local leaders to overcome obstacles such as density-unfriendly or discriminatory zoning.
Office Buildings | Mar 26, 2021
Finding success for downtown office space after COVID-19
Using the right planning tools can spur new uses for Class B and C commercial real estate.
Architects | Mar 25, 2021
The Weekly Show, March 25, 2021: The Just Label for AEC firms, and Perkins Eastman's Well-Platinum design studio
This week on The Weekly show, BD+C editors speak with AEC industry leaders about the Just Label from the International Living Future Institute, and the features and amenities at Perkins Eastman's Well Platinum-certified design studio.
Contractors | Mar 16, 2021
Autodesk U.S. Construction Outlook 2021 report finds commercial bidding activity has surpassed pre-pandemic levels
Despite forecasted drop in non-residential spending for 2021, real-time bidding data from BuildingConnected suggests short-term relief is en route as delayed or rescheduled projects come back online.
Coronavirus | Mar 11, 2021
The Weekly show, March 11, 2021: 5 building products for COVID-related conditions, and AI for MEP design
This week on The Weekly show, BD+C editors speak with AEC industry leaders about building products and systems that support COVID-related conditions, and an AI tool that automates the design of MEP systems.
Laboratories | Mar 10, 2021
8 tips for converting office space to life sciences labs
Creating a successful life sciences facility within the shell of a former office building can be much like that old “square peg round hole” paradigm. Two experts offer important advice.
Contractors | Mar 10, 2021
AGC: House votes in favor of idling workers, stripping their privacy and denying them the opportunity to establish businesses
Democrats' vote in favor of the PRO Act will hurt workers and undermine the economic recovery, top construction industry official says.
