Confidence Index: Construction chiefs sense shift to recovery mode

Sources: McGraw Hill Construction, Engineering News-Record, New York; CP staff

After five years of depressed or sluggish conditions, the construction industry is set to show meaningful gains in 2013 activity, according to executives surveyed for the ENR Construction Industry Confidence Index (CICI).

The first quarter of 2013 CICI, which measures industry sentiment for market sectors and trends, is 64 on a scale of 100, indicating belief construction is in recovery mode. The figure easily trumps a CICI rating of 50 for the fourth quarter of 2012, when survey respondents characterized the market as still in decline and struggling to make real gains. The index is based on 376 responses to surveys sent to more than 3,000 U.S. executives from ENR’s lists of leading contractors and engineering firms.

Only 13 percent of those polled believe the market remains in decline, while 32 percent see present growth and 44 percent predict a pick up within the next six months. Construction executives firmly see a full recovery in 2014; 58 percent of survey respondents say the market will be on the upswing versus 8 percent believing decline will continue over next 12–18 months.

Respondents cite private-sector markets as the healthiest, topped by petroleum, power, health care and multi-unit residential. All sectors measured in the survey are on the upswing, excepting water and wastewater infrastructure, gauged flat. Part of the optimism stems from the view that project financing is rising, especially in private sector markets. ENR staff finds that while 56.4 percent of survey respondents said financing conditions are unchanged from six months ago, 31.9 percent indicated credit for projects was easing from a mid-2012 level.

Construction and engineering officials remain cautious of public sector construction spending due to the constraints of budget shortfalls or deficits. Just over one quarter of survey respondents believe a State of the Union Address pledge President Obama made supporting infrastructure funding will actually result in more public works dollars. Additional market outlook and survey methodology are provided here.