Industry Groups Mixed on Contractor Outlook
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- November 23, 2011
Seems these days that any good news is followed by bad news. Sometimes they’re even one in the same. That’s certainly true of the contracting industry, whose outlook was recently defined by the terms “cautiously optimistic” and “gradual progress” by two industry associations.
The Air Conditioning Contractors of America (ACCA) and the Associated Builders and Contractors (ABC) both released data recently on what lies ahead for the contracting industry and the mood seems to be one of good news/bad news.
According to the ACCA’s November Contractor Comfort Index (CCI), a monthly survey of the association’s contracting members, contractors remain cautiously optimistic on short-term growth.
For October 2011, the CCI is 55. These results also show that contractors are feeling a less confident than they were 12 months earlier when the CCI was 65. The CCI is calculated based on a survey of the association’s contractor members, who are asked how positively they feel about new business prospects, existing business activity, and expected staffing decisions in the short-term future. Weighted and averaged into one number, a CCI of 50 or above reflects anticipated growth.
Confirming the diverging sentiment, the ABC recently released its forecast for the US commercial and industrial construction industry, which predicts gradual progress in 2012, as declines in publically financed construction partially offset gains in private construction.
Nonresidential construction spending is expected to grow 2.4 percent in 2012 following a 2.4 percent decrease in 2011. The pace of recovery in the nation’s nonresidential construction industry remains soft and 2012 is positioned to be a year of slow gain. The first half of 2012 may be particularly challenging, a reflection of the soft patch in economic activity experienced during much of the first half of 2011.ABC’s national Construction Backlog Indicator, which stood at 8.1 months for both the second and third quarters of 2011, is not expected to advance substantially and likely will remain in the vicinity of 8 months of backlog for much of 2012. However, backlog is one month higher from the same time last year. A backlog of less than 8 months is associated with construction spending declines, while a backlog exceeding 8 months is statistically associated with future construction spending increases. Today’s level of backlog is consistent with flat construction spending.