Industry Market Confidence Hits Record High
The construction market has enjoyed steady growth for several years. Most industry executives believe this growth will continue through 2016. But one sector that has been leading the recovery, petroleum, has suddenly hit a roadblock as plummeting oil prices have resulted in project postponements.
The ENR Construction Industry Confidence Index for the first quarter shows that, of the 305 executives of large construction and design firms responding to the survey, a majority believe the market is growing. The CICI index moved up a point, to a record 78 on a scale of 100, in the first-quarter survey, an indicator of a growth market.
The CICI measures executive sentiment about the current market and reflects the respondents' views on where it will be in the next three to six months and over a 12- to 18-month period. The index is based on responses to surveys sent out to more than 6,000 U.S. firms on ENR's lists of leading contractors, subcontractors and design firms. The latest results are calibrated from a survey conducted from Feb. 19 to March 16.
Surveyed industry executives believe most market sectors measured by the CICI are now in growth mode. The index has risen steadily, as few firms now believe the market is in decline.
Survey respondents generally believe the overall market will continue to pick up steam over the next 18 months. For example, 60% say the current market is growing, up from 55% in the last quarter, and 67% believe the market will be in growth mode in three to six months, up from 61% in the fourth quarter.
The soon-to-be-released results of the latest Confindex survey from the Construction Financial Management Association, Princeton, N.J., shows growing optimism about 2015. CFMA polls 200 CFOs from general contractors, subcontractors and civil contractors.
While a Confindex rating of 100 indicates a stable market, higher ratings show growth is expected. "Our Confindex rose by five points, to 137 [on a scale of 200], for the first quarter," says Stuart Binstock, CEO of CFMA.
CFMA Sees Near-Term Growth
Binstock notes that the "financial conditions" component of the CFMA survey rose sharply in the fourth quarter, up 11 points to 127. Further, the "current confidence" component was up 10 points, to 139. "This indicates that our CFOs are very optimistic about the near-term market," Binstock says. However, he noted that the "overall business conditions" component was down four points, to 148, and the "year-ahead outlook" component also was down, to 133 from 135.
"Our four components are somewhat time-based," notes Anirban Basu, CEO of economic consultant Sage Policy Group Inc., Baltimore, and CFMA economic adviser. The two components that look at the near-term markets are very strong, he says.