The latest Construction Confidence Index shows construction industry leaders were less confident in July regarding the nonresidential construction sector’s future, according to www.abc.org.
Although contractors were slightly less optimistic about sales, profit margins and staffing levels, all three components were well above the diffusion index threshold of 50. More than 60% of respondents expect sales to increase during the next six months. Additionally, more than 56% of contractors expect staffing levels to increase and 52% expect profit margins to expand.
In July, the CCI decreased from 65.3 to 64.8 for sales expectations; 61.3 to 60 for profit margin expectations; and 64.6 to 63.3 for staffing levels.
“Contractor confidence is behaving as expected during the latter stages of a construction spending cycle,” says 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,” Basu continues. “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.”
