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
| Nov 4, 2011
Two Thornton Tomasetti projects win NCSEA’s 2011 Excellence in Structural Engineering Awards
Altra Sede Regione Lombardia and Bank of Oklahoma Center both recognized.
| Nov 3, 2011
GREC Architects announces opening of the Westin Abu Dhabi Golf Resort and Spa
The hotel was designed by GREC and an international team of consultants to enhance the offerings of the Abu Dhabi Golf Club without imposing upon the dramatic landscapes of the elite golf course.
| Nov 3, 2011
Hardin Construction tops out Orlando Embassy Suites
The project began in April 2011 and is expected to open in fall 2012.
| Nov 3, 2011
2012 Pritzker Architecture Prize Ceremony to be held in China
The tradition of moving the event to world sites of architectural significance was established to emphasize that the prize is international, the laureates having been chosen from 16 different nations to date.
| Nov 3, 2011
DMR Architects welcomes two new staff members
Siro Gonzalez joins the staff as junior graduate architect and Megan Byers joins the staff as marketing assistant.
| Nov 2, 2011
Mega deals drive 28% increase in global engineering and construction merger and acquisition value
Financial investors lead mega deal activity, China most active country in global domestic deals.
| Nov 2, 2011
Alexandria Real Estate Equities, Inc. breaks ground on Alexandria Center in Cambridge, Mass.
307,000-sf building to be house to executive offices of Biogen Idec.
| Nov 2, 2011
CRSI’s Manual of Standard Practice now available
This resource contains information on recommended industry practices for estimating, detailing, fabricating, and placing reinforcing steel for reinforced concrete construction.
| Nov 2, 2011
John W. Baumgarten Architect, P.C, wins AIA Long Island Chapter‘s Healthcare Award for Renovation
The two-story lobby features inlaid marble floors and wood-paneled wainscoting that pays homage to the building’s history.
