Survey shows lower confidence among construction industry leaders

Published November 21, 2019 by Sydney Lake

U.S. construction industry leaders’ confidence in sales, profits and staffing levels fell in September, according to national survey results released Thursday.

Despite the decline, respondents to the Construction Confidence Index (CCI) survey remained optimistic about the near-term prospects for sales, labor and profit margins, according to the Associated Builders and Contractors trade organization.

● The CCI for sales expectations decreased from 63.9 in August to 62.4 in September.
● The CCI for profit margin expectations decreased from 60.8 to 58.5.
● The CCI for staffing levels decreased from 64.0 to 62.2.

However, more than 60% of contractors said they plan to expand staffing levels over the next six months, while fewer than 50% of contractors expect profit margins to increase. Approximately 58% of contractors anticipate sales rising over that time span.

Readings above 50 indicate growth, while readings below 50 are unfavorable.

“Many contractors are still securing plenty of work but are increasingly suffering difficulty finding the people needed to complete that work,” ABC chief economist Anirban Basu said in a statement. “The result is rapidly rising compensation costs, including in the form of overtime, which has served to suppress expectations for industry profit margins.”

Despite this, Basu says that only one in six contractors expect margins to decline over the next six months, and fewer than one in 10 contractors anticipate that staffing levels will slip over the near term.

“What’s more, industry employment continues to expand as the average firm works ever harder to secure talent,” Basu said. “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.”