FMI’s Nonresidential Construction Index Remains Constant

FMI’s Nonresidential Construction Index Remains Constant

September 3rd, 2013

RALEIGH, N.C. (September 3, 2013) – FMI (www.fminet.com), a leading provider of management consulting and investment banking* to the engineering and construction industry, announces the release of the 2013 Third Quarter Nonresidential Construction Index report. The NRCI score of 60.3 is a .2-point improvement over Q2.

NRCI = 60.3

Although the numbers aren't drastically rising, the sustainability and continuing upward movement is encouraging. This score remains the highest score for the NRCI index since Q1 2009. The index for the overall economy rose to 72 points and the combined index sentiment for economies where panelists are doing business rose 3.2 points.

Cost of construction materials, cost of labor and productivity continue to hold down the index. Additionally, investments in technology, equipment and training are needed to keep the economy from going stagnant.

Panelists for this quarter's NRCI suggest that the uncertainty for investments is a result of the immigration/labor bills, delays in implementation of "Obamacare" and the impact of residential growth on nonresidential construction. These issues are causing the industry to sit back and wait to see the outcomes before making any risky investments.

To download a copy of the full report, please log in. For reprint permission or to schedule an interview with the author, please contact Sarah Avallone at 919.785.9221 or savallone@fminet.com.

FMI Releases Q2-2013 Construction Outlook Report

July 8th, 2013

Annual Put-In-Place Construction Predictions Shrink to $913 billion

RALEIGH, N.C. (July 8, 2013) – FMI (www.fminet.com), the leading provider of management consulting and investment banking to the engineering and construction industry, releases today its Q2-2013 Construction Outlook. The strength of individual markets is shifting, reducing annual Construction-Put-In-Place predictions to $913 billion, a 7% growth from 2012. This is down nearly $6 billion from the $918,897 million, 8% growth estimated in the Q1's Outlook. However, FMI does expect growth to return to 8% growth in 2014 with annual CPIP reaching $989 billion.

The major markets adjusted downward with lower expected growth are:

Residential Construction (-1.8%) — FMI continues to forecast a 23% increase in construction put in place for single-family housing. However, multifamily housing has dropped from a strong increase of 42% in 2012 to a current 31% increase for 2013.
Commercial Construction (-0.8%) — The current forecast calls for about a 1% drop in commercial construction from the Q1 forecast. However, this still represents a modest increase of 6%, to $49.8 billion for 2013. One of the contributing factors is that sales for retail and food service businesses is slower than initially anticipated.
Healthcare (-3.15%) — Contributing factors for the decrease include hospital beds per 1,000 people trending downward and shorter patient stays.
Amusement and Recreation (-2.0%) — Given the belt-tightening attitude across the country right now, it will likely be much more difficult to get funding from taxes and municipalities to build new stadiums in the near future.
Sewage and Water Disposal (-3.8%) — Construction for sewage and waste disposal was off 2% in 2012. FMI forecasts another 2% drop in 2013. The ability to fund necessary water infrastructure improvements is central to the decline as many municipal water systems still depend on the tax base for funding.
Water Supply (-3.2%) — Construction for water supply projects will drop 1% in 2013 after dropping 7% in 2012. On the bright side, in March the Senate Environmental and Public Works Committee unanimously approved a Water Resources Development Act, including a measure to create the Water Infrastructure Finance and Innovation Act. WIFIA would provide $50 million per year from 2014 to 2018 to help fund large-scale water infrastructure projects.

While there is no singular reason for the drop in these markets—each is evaluated on its own criteria—there are a few economic concerns that touch all of them.

•    The decline in public construction

•    Expectations of more cuts as the sequestration continues

•    Tight lending criteria

•    Consumers cautious about increasing their debt load

This economic climate will keep the heat on A/E/C industry competition, especially if companies that make their livelihood in government construction start looking for work in the already competitive private sectors.

The report details CPIP in three residential building, 11 nonresidential building and five non-building structure categories. To login and download a copy of the full report, click here. For reprint permission or to schedule an interview with the author, please contact Sarah Avallone at 919.785.9221 or savallone@fminet.com.