According to FMI’s Q2 2015 Nonresidential Construction Index Report (NRCI), the nonresidential construction sector has grown at a solid pace the past 18 months despite rising costs of construction materials and labor as well as a decline in regional economics where most construction activity is taking place.
FMI’s Q2 2015 NCRI reported at 64.9 – a number not far off from Q1’s reading of 64.8. However, the NRCI component for the overall economy dropped 1.9 points to 76.9 points this quarter. According to FMI, the index describes the current state of the nonresidential construction sector.
Throughout Q2, improvements were seen in the panelists’ construction business, the nonresidential building construction market and the expected change in backlog. Despite the improvements, productivity remained flat at 51.0 and the cost of construction materials and labor dropped one point to 21.4. In addition, the report noted the most important factor characterizing “green construction” is lower energy costs, and only 17 percent of panelists have more than 50 percent of their projects in the “green” category.
“While the current and future outlook for nonresidential construction appears stable if relatively unchanged, things could become more dynamic,” says Phil Warner, research consultant for FMI. “In fact, improvements in profitability would happen faster if costs of materials and labor weren’t rising faster than construction pricing. There is also an increasing amount of evidence that more contractors are capacity-limited.”
The full NRCI Q2 2015 report can be read here.
