Construction industry leaders’ confidence rose in May as states began to reopen amid the COVID-19 crisis, according to www.abc.org.
All three components increased in May, though two of the three components remain below the diffusion index threshold of 50; the staffing level index remained above that threshold, with more than 38% of contractors expecting to expand their staff during the next six months. More than 45% of contractors expect their sales to decline during the next six months, and 35% expect sales to increase. More than 48% of contractors expect their profit margins to decrease during the next two quarters.
In May, the CCI increased from 41.1 to 44.9 for sales expectations; from 39.8 to 41.7 for profit margin expectations; and from 51.4 to 53 for staffing levels.
“Given the depth of the economic downturn and myriad other issues facing America today, backlog and contractor confidence data have held up better than one might have anticipated,” said ABC Chief Economist Anirban Basu. “But the marketplace is still tilted toward pessimism. For instance, more contractors expect sales and profit margins to decline than increase over the next six months, which is consistent with anecdotal information suggesting that many project owners are considering postponing projects and possibly rebidding them.
“Contractors still expect to boost staffing levels over the next six months,” Basu continued. “But this may simply be a function of job sites reopening as construction shutdowns end. Almost 70% of respondents had job sites shut down due to government mandates and other reasons, and with labor shortages in place before the pandemic, contractors may have residual staffing needs. It remains to be seen whether expected employment growth going forward coincides with speedy recovery in overall contractor confidence and backlog.”
