COST REPORT: Concerns About U.S. Economy Deflate Industry Confidence

This bleak view of the markets' immediate future is reflected in the most recent ENR Construction Industry Confidence Index survey.

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Binstock says the political fight over raising the debt ceiling and high levels of unemployment may have soured industry executive's views of the market, as reflected in the ENR survey.

The rise in the portion of the CONFINDEX relating to current market conditions may be a bit misleading. “The current market conditions results are a reflection of projects launched or funded late last year, when the economy seemed to be in better shape,” says Anirban Basu, CEO of Baltimore-based economic consultant Sage Policy Group Inc. and an economic adviser to CFMA.

Basu says the drop in the long-range business confidence reflects how little work currently is coming out. This decline indicates conditions are likely to be tougher for contractors next year.

Basu says industry execs believe things will not be getting worse, but it will take a long time before the market improves. “It could be that low workloads are the new normal,” he says. As one respondent says, “Do not mistake 'stable' for 'good.' There are simply some markets that are neither improving nor declining from their current bad position.”

Applying ENR's CICI formula to individual sectors, respondents felt most were down from the second quarter. The gainers were multi-unit residential (up four points to 62) and petroleum (at 64, up one point). The power and hotel-and-hospitality markets remained the same at 67 and 44, respectively. All other markets fell two to five points.

Overall, the CICI survey for the third quarter shows that industry executives are worried about the U.S. economy and its impact on the construction market. “The industry is beginning to believe not just that the recession will continue to drag on, but that Washington does not have the power to fix it,” says Basu. While most believe the market has hit bottom, there will be no quick fix, and any turnaround will be slow and lengthy.

Gary J. Tulacz has been, since 1993, senior editor in charge of ENR's Top Lists, which bring structure to the huge global construction industry through annual surveys and market analysis of its key segments and major players. The array of surveys rank companies, based both in the U.S. and outside, which perform general contracting, specialty contracting, engineering, architecture and environmental services, among other specialties.

The rankings, based on annual revenue from work at home and abroad, are further divided into specific market categories. Click here for descriptions and schedules of ENR Top List surveys and access to information on current and past listed firms.

Gary also created the ENR Top 100 Green Contractors and Design Firms rankings and the ENR quarterly Construction Industry Confidence Index that measures firm executives' market outlook.

This survey data is used by industry firms and other businesses, government agencies and academics also to gauge the health of the global construction market.

A graduate of Fordham College in New York City and the Fordham University School of Law, Gary previously wrote extensively on employee relations in such areas as labor and immigration law and employee drug testing.

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