First Half CCI Climbs Slightly Higher
Builders Give Industry Mostly Good Grades
The Associated Builders and Contractors had, for the most part, a positive evaluation of nonresidential building activity in the first six months of 2015, based on the readings in its Construction Confidence Index.
Construction company executives offered a mostly upbeat assessment of the nonresidential building industry's overall performance in the first six months of 2015.
Their opinions are reflected in the Construction Confidence Index for the first half of 2015 that was compiled after Associated Builders and Contractors surveyed its members.
Associated Builders and Contractors releases CCI evaluations for the first and second halves of each year. CCIs are also viewed as forecasts for the construction industry about six months into the future.
"This national economic indicator (the CCI) provides stakeholders with a forward-looking view of the nation's nonresidential construction industry," the ABC said.
Each CCI has three basic components. Readings for expectations in sales and profit margins both rose, while intended staffing levels dropped.
A CCI reading above 50 indicates growth, while anything below 50 points to a contraction. The CCI for the first half of 2015 contains these key points:
o Sales expectations jumped to 69.4 from 67.3.
o Profit margin projections climbed to 62.9 from 61.0.
o Staffing level intentions dipped to 66.2 from 66.3.
"The pace of hiring is not expected to accelerate over the next six months due in large part to a lack of available skilled labor," the ABC said.
But the profit margin metric is close to the highest reading in the three-year history of the CCI, according to the ABC, and three of every four respondents said they believe sales will climb higher through the rest of 2015.
The U.S. economy continues to rebound, but there are plenty of reasons to remain cautious.
"Financial markets have been jittery, the global economy has been slowing and Federal Reserve policy has become less predictable and more confusing," Anirban Basu, the ABC's chief economist, said.
Even so, growth in nonresidential construction spending is an important "supporting actor" in the national economy's recent success, the ABC said.
The nation's shortage of skilled laborers in the construction industry is worsening, a leading consultant to the building and engineering industries has found.
FMI Corp. has just released its 2015 Talent Development Survey in the Construction Industry, and one of its key points is that the labor shortage has intensified.
In an FMI survey of two years ago, 53 percent of the companies that responded said they were having difficulty finding qualified employees. But this metric jumped to 86 percent in the latest survey, FMI says.
Most construction companies lack any sort of process to develop and promote high-performing employees, FMI also found.
In addition, most firms don't tie training expenditures to management performance, and annual reviews are typically the way many companies try to improve employee production.
"People-development is critical to companies' future success and ability to stay competitive, " Chris Daum, president of FMI Capital Advisors, said. "It is especially important in an environment of skilled labor shortage and increasing competition."
Comments from executives and employees of companies in the engineering and construction industries form the basis of the survey. FMI asked for their opinions about people development, talent retention, labor force structure and succession plans, among other questions.