The Building Tradesman Newspaper

Friday, July 09, 2010


By The Building Tradesman

More confidence in work outlook

Construction professionals expect the industry recession to start to turn around by the end of the year, according to a survey released June 29 by the Engineering News Record (ENR) and published by McGraw-Hill Construction.

The ENR Construction Industry Confidence Index (CICI) for the second quarter of 2010 shows that construction and design firm executives believe the worst may soon be over.

The second quarter index, 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 the first quarter of 2010 and last year (up 16 points from 25 in the first quarter of 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.

ENR’s CICI survey found confidence gains in 13 of the 15 construction market sectors it measures,” said Janice L. Tuchman, editor-in-chief of Engineering News-Record. “The only exceptions were in the petroleum market, which fell from 51 to 44 in the wake of the BP oil spill, and the transportation sector, which dropped from 55 to 54 due to concerns about the stalled federal highway reauthorization bill.”

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% who answered this way in the first quarter of this year).

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.