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
| Jul 19, 2012
The best states for a construction job
The top anticipated engineering and skilled labor shortages according to a survey of 2,223 construction industry professionals.
| Jul 19, 2012
Suffolk Construction launches subcontractor development series
Professional certificate program to provide core construction management skills to disadvantaged, minority, and women business enterprises.
| Jul 19, 2012
Construction begins on military centers to treat TBI and PTS
First two of several centers to be built in Fort Belvoir, Va. and Camp Lejeune, N.C.
| Jul 18, 2012
U.S. engineering firms set sail for foreign ports
Other E/EA Giants 300 firms are just dipping their toes into foreign waters, still looking for international business but choosing not to establish additional offices.
| Jul 18, 2012
Architecture giants spreading their wings
A/AE Giants 300 rankings reveal firms branching out globally, merging, adding services.
| Jul 18, 2012
Green expert Kats joins GreenWizard as an advisor
Kats' role is to help further expand GreenWizard’s impact in the sustainable construction industry.
| Jul 18, 2012
Construction employment stagnates in June
Lack of hiring in construction combined with job growth elsewhere threatens to create skilled-labor gap once contractors are ready to hire again.
| Jul 17, 2012
AIA and Architecture for Humanity select Disaster Response Grant recipients
Awards help each group implement their locally driven preparedness project in the second half of the year.
| Jul 17, 2012
KM/Plaza changes name to Plaza Construction
Lands new projects including the Perry South Beach Hotel and Dadeland Mall Kendall Wing Expansion.
| Jul 17, 2012
KBE Building awarded Platinum STEP Award
STEP program provides analysis of safety and loss prevention programs, measure safety program improvements, and provide performance recognition.
