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Nonresidential Construction Leaders' Optimism Slips

But Still Somewhat Buoyant

Nonresidential Construction Leaders' Optimism Slips

ABC chief economist Anirban Basu expects profit margins in the nonresidential construction industry to continue to expand and more firms will add employees than let them go, indicating "that for now, the U.S. expansion remains firmly in place."


Contractors in the nonresidential construction industry expressed a less positive attitude about near-term prospects according to the latest Construction Confidence Index (CCI) put out by the Associated Builders and Contractors' (ABC) but the scores still were strong with nearly 67% of them expecting sales to rise during the next six months, more than 59% expecting staffing levels to increase and 54% expecting profit margins to expand.

However, on a month-to-month basis, the CCI for sales expectations decreased from 70 to 65.3, the CCI for profit margin expectations fell from 62.8 to 61.3 and the CCI for staffing levels fell from 66.8 to 64.6. CCI is a diffusion index. Readings above 50 indicate growth, while readings below 50 are unfavorable.

"Economists near and far are searching for signs of the next economic downturn," said ABC chief economist Anirban Basu. "Among the signals are increasingly volatile financial markets, an inverted yield curve, unemployment that sits meaningfully below its natural rate and a variety of indicators suggesting that the global economy continues to soften. Many economists continue to predict recession within the next one to two years.



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October 18, 2019, 10:29 pm PDT

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