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
Giants 400 | Dec 12, 2023
Top 35 Military Facility Construction Firms for 2023
Hensel Phelps, DPR Construction, Walsh Group, and Whiting-Turner top BD+C's ranking of the nation's largest military facility general contractors and construction management (CM) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
Contractors | Dec 12, 2023
The average U.S. contractor has 8.5 months worth of construction work in the pipeline, as of November 2023
Associated Builders and Contractors reported today that its Construction Backlog Indicator inched up to 8.5 months in November from 8.4 months in October, according to an ABC member survey conducted Nov. 20 to Dec. 4. The reading is down 0.7 months from November 2022.
Giants 400 | Dec 11, 2023
Top 80 Local Government Building Construction Firms for 2023
Turner Construction, Clark Group, Holder Construction, and Pepper Construction top BD+C's ranking of the nation's largest local government building general contractors and construction management (CM) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
Giants 400 | Dec 11, 2023
Top 50 State Government Building Construction Firms for 2023
Hensel Phelps, Turner Construction, Clark Group, and PCL Construction top BD+C's ranking of the nation's largest state government building general contractors and construction management (CM) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
Codes and Standards | Dec 11, 2023
Washington state tries new approach to phase out fossil fuels in new construction
After pausing a heat pump mandate earlier this year after a federal court overturned Berkeley, Calif.’s ban on gas appliances in new buildings, Washington state enacted a new code provision that seems poised to achieve the same goal.
Green | Dec 11, 2023
U.S. has tools to meet commercial building sector decarbonization goals early
The U.S. has the tools to reduce commercial building-related emissions to reach target goals in 2029, earlier than what it committed to when it signed the Paris Agreement, according to a report by the U.S. Green Building Council.
MFPRO+ News | Dec 11, 2023
U.S. poorly prepared to house growing number of older adults
The U.S. is ill-prepared to provide adequate housing for the growing ranks of older people, according to a report from Harvard University’s Joint Center for Housing Studies. Over the next decade, the U.S. population older than 75 will increase by 45%, growing from 17 million to nearly 25 million, with many expected to struggle financially.
Office Buildings | Dec 11, 2023
Believe it or not, there could be a shortage of office space in the years ahead
With work-from-home firmly established, many real estate analysts predict a dramatic reduction in office space leasing and plummeting property values. But the high-end of the office segment might actually be headed for a shortage, according to real estate intelligence company CoStar Group.
University Buildings | Dec 8, 2023
Yale University breaks ground on nation's largest Living Building student housing complex
A groundbreaking on Oct. 11 kicked off a project aiming to construct the largest Living Building Challenge-certified residence on a university campus. The Living Village, a 45,000 sf home for Yale University Divinity School graduate students, “will make an ecological statement about the need to build in harmony with the natural world while training students to become ‘apostles of the environment’,” according to Bruner/Cott, which is leading the design team that includes Höweler + Yoon Architecture and Andropogon Associates.
Giants 400 | Dec 5, 2023
Top 50 Federal Government Building Construction Firms for 2023
Fluor, BL Harbert, Hensel Phelps, and Turner Construction top BD+C's ranking of the nation's largest federal government building general contractors and construction management (CM) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
