Contractor Confidence Ends 2016 Down but Still in Positive Territory, Says ABC

Expectations for 2017 have become less optimistic, but the majority of industrial and commercial construction contractors still expect growth this year, according to the latest Associated Builders and Contractors (ABC) Construction Confidence Index (CCI). Although all three diffusion indices in the survey — profit margins, sales and staffing levels—fell by more than five points, they remain well above the threshold of 50, which signals that construction activity will continue to be one of the few significant drivers of economic growth.

The latest survey revealed that:

  • The CCI for sales expectations fell from 65.1 to 59.7;
  • The CCI for profit margin expectations fell from 61.1 to 56; and
  • The CCI for staffing levels fell from 64.9 to 59.5.

“There may be a period during which the pro-business agenda being forwarded in Washington, D.C., will significantly impact construction firm expectations,” says ABC chief economist Anirban Basu. “In fact, many construction executives have become more confident, including those who would stand to benefit most directly from an infrastructure package. However, there is a realization among construction firms that, if implemented, many of these pro-business initiatives would begin impacting the economy beyond the six-month timeframe built into ABC’s construction confidence survey.

“Despite an ongoing dearth of public construction spending growth, certain construction segments have experienced significant expansion over time, including office, hotel, healthcare and multifamily segments,” adds Basu. “This helps explain why more than 60 percent of respondents expect their sales to rise during early 2017 and the same number expect staffing levels to rise.

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