FMI has released its Nonresidential Construction Index report for the first quarter of 2012.
The NRCI gained 7.8 points over last quarter to 58.1 this quarter, which FMI attributes to panelists’ confidence in construction activity in following the lead of the improving the economy. FMI reports good signs for both hiring plans and construction-put-in-place (CPIP) predictions in 2012, but panelists attribute low project pricing and high competition to driving the market place.
FMI reports five percentage points increase in hiring over this time last year, and 42 percent of panelists indicated a zero to five percent increase in full-time direct employees. Additionally, fewer panelists indicated a reduction in salaried employees.
The report indicates expectations for CPIP are positive, as 41.3 percent of panelists expect growth of 0.5 to 2.5 percent for 2012.
The overall economy showed the strongest improvement a 25 point gain from 43.6 last quarter to 68.7 in the first quarter, which reflects improvement in many economic indicators including unemployment.
The local markets for nonresidential construction, which are at 54.9, are improving, and panelists’ responses indicate these markets are still very competitive.
The cost of materials continues to rise, with its component down nearly 5 points to 26.2, which is likely to raise the cost of projects while lowering profit margins for contractors.
The cost of labor improved slightly to 41.5, indicating little change over the score of 40.0 last quarter. However, no panelists indicated they were experiencing lower labor costs.
Although contractors are continuing to make moderate gains in productivity, this component, which is , at 52.9, is still too weak to offset rising costs for labor and materials.
For a copy of the full report, click here.