Construction Industry Confidence Index Up 7 Points in 3 Months

Reposted from AWCI Members Only Online
Construction professionals expect the industry recession to start to turnaround by the end of the year, according to an ENR Construction Industry Confidence Index (CICI) survey for the second quarter of 2010. The survey shows that construction and design firm executives believe the worst may soon be over, according to Engineering News-Record.

The Q2-2010 CICI, which measures industry sentiment for market sectors and trends, is 41 on a scale of 100, where a value of 50 indicates a stable market and a value from 51 to 100 reflects the belief that the market is improving. While still below an index of 50, the index shows a dramatic improvement over last quarter (up seven points from 34 in Q1-2010) and last year (up 16 points from 25 in Q1-2009). The index is based on 555 responses to surveys sent to more than 2,000 domestic firms on ENR’s lists of leading contractors and engineering firms.

When assessing the construction market, 53 percent of respondents say the current construction market is still in decline, 36 percent believe it has stabilized, and 11 percent believe it is improving. However, survey respondents expect the picture to be different in 12 to 18 months, with 50 percent believing the construction market will be improving and another 39 percent believing it will stabilize in 2011.

The CICI survey also asked participants about the ease of obtaining project financing and found that securing financing continues to be a challenge, although the responses were slightly more positive than last quarter. Still, 39.3 percent say obtaining project financing is tougher than six months ago (vs. 50.7 percent who answered this way in Q1), and 13.0 percent say project financing is getting easier, compared to 7.2 percent in Q1. The industry is also worried about inflationary pressures once the market turns around, but half of respondents said they have seen little or no upward pressure on prices.

The next quarterly survey results will be available in September 2010. For more information and methodology, click here.