Construction industry executives continue to express confidence that the market is in growth mode. For many firms and in several market sectors, the level of growth leaves a lot to be desired. However, most industry executives believe the recovery will continue, and some believe it will accelerate in 2014.
The ENR Construction Industry Confidence Index survey for the first quarter shows that, of the 414 executives of large construction and design firms responding to the survey, the vast majority believes the market is stable or growing. The CICI index stood at a record 72 on a scale of 100 in the 2014 first-quarter survey, an indicator of a growth market. This mark is three points above the 69 rating from the fourth quarter of 2013.
The CICI measures executive sentiment about the current market and reflects their views on where it will be in the next three to six months and over a 12- to 18-month period. The index is based on responses to surveys sent out to more than 6,000 U.S. firms on ENR's lists of the leading contractors, subcontractors and design firms. The latest results are based on a survey conducted from Feb. 13 to March 10.
For the fourth-straight quarter, the surveyed industry executives believe all the market sectors measured by the CICI are now in growth mode. For the CICI survey, execs were asked to assess current and future market prospects in general and in any of 15 market sectors in which they currently work. In all 15 of the survey's markets, more executives saw growth in their particular market sector than those in the same sector saw decline.
Among the individual market sectors, the petroleum market ranked as the highest-rated, with a CICI rating of 81, which was down one point, from 82, from the fourth quarter of 2013. The second-highest-rated market, multi-unit residential, also is down, to 75 from 76. These were the only two sectors that declined in this quarter. Several respondents said the multi-unit residential market is getting overbuilt.
Another sector showing strength is the hotels-and-hospitality market, which rose four points, to 71, on a scale of 100. At the beginning of the recession in the first quarter of 2009, it was the lowest-rated market, at 19. But the entertainment-theme parks-cultural market is currently the lowest-rated sector, at 55.
Sectors that are funded primarily by the public sector showed some strength in the survey. For example, the transportation market was rated at 66, up four points from the previous quarter, and the water-sewer-waste market was up six points, to 62.
However, most survey respondents do not see these markets as growing rapidly now but believe they are due for a major rebound later this year and in 2015, giving a boost to these markets' ratings.
CFOs See Market Improving
The CICI findings parallel the soon-to-be-released results of the latest Confindex survey from the Construction Financial Management Association, Princeton, N.J. CFMA polls 200 CFOs from general contractors, subcontractors and civil contractors. While a Confindex rating of 100 indicates a stable market, higher ratings show growth is expected.