FMI Corp.’s Nonresidential Construction Index (NRCI) Report for the third quarter of 2015 shows the nonresidential construction sector slightly declining from 64.9 points in the second quarter of 2015 to 63.6 points. According to FMI, the index reflects the observations and sentiments of a sampling of construction industry executives nationwide.
Despite the decrease in the nonresidential building construction market, the NRCI component remains in the optimistic range. Additionally, the report noted the measure of expected change in backlog dropped 3.1 points to reach 68.8, with current backlog remaining at 10 months. It also reported the cost of labor rose at 12.5, with materials costs still high but lower than last quarter. The report says both labor and material costs act to hold down the overall NRCI as costs increase. Finally, the productivity component stands at 47.6, the lowest its been since 2008, reports FMI. Those surveyed expressed difficulties in maintaining productivity with rising material and labor costs.
“The construction industry continues to proceed on the recovery track, although it is showing signs of a minor deceleration,” says Chris Daum, president and senior managing director of investment banking at FMI. “Despite the decrease in projected backlog and the squeeze from rising material costs, executives in our industry are still bullish and hold positive outlooks overall.”
According to the report, all sectors within the construction industry continue their recovery since the financial crisis, and the third quarter NRCI report summarizes how businesses have adapted during the recession.
