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Contractors Optimistic About Near-Term Nonresidential Construction

Washington, DC - U.S. construction industry leaders’ confidence diminished somewhat in July 2019, yet they remain optimistic regarding nonresidential construction’s near-term prospects, according to the Construction Confidence Index (CCI) released by Associated Builders and Contractors (ABC).

While contractor confidence regarding sales, profits and staffing levels declined for a third consecutive month, all three principal components measured by the survey remained well above the diffusion index threshold of 50. More than 60% of contractors expect sales to increase over the coming six months, while more than 56% expect staffing levels to increase and 52% expect profit margins to expand.

• The CCI for sales expectations decreased from 65.3 to 64.8 in July.

• The CCI for profit margin expectations fell from 61.3 to 60.

• The CCI for staffing levels fell from 64.6 to 63.3.

“Contractor confidence is behaving as expected during the latter stages of a construction spending cycle,” said ABC chief economist Anirban Basu. “While the average American nonresidential contractor remains busy, the July CCI data suggests an oncoming inflection point in trends. And according to available construction spending data, some softening in the pace of growth has already begun.

“That said, the near-term remains bright,” said Basu. “While the greatest challenge for many contractors remains completing work under contract given significant skills shortages, contractors collectively expect to continue to expand staffing levels in the context of increasing sales. Perhaps most impressively, despite rapidly growing compensation costs, the average contractor expects that profit margins will continue to rise over the next six months, consistent with a substantial appetite for construction services for the balance of the current year and into 2020.”

CCI is a diffusion index. Readings above 50 indicate growth, while readings below 50 are unfavorable.

About The Associated Builders And Contractors

Associated Builders and Contractors is a national construction industry trade association representing more than 21,000 members. Founded on the merit shop philosophy, ABC and its 69 chapters help members develop people, win work and deliver that work safely, ethically and profitably for the betterment of the communities in which ABC and its members work. ABC's membership represents all specialties within the U.S. construction industry and is comprised primarily of firms that perform work in the industrial and commercial sectors. To learn more, visit www.abc.org.

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