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Blog/May 20, 2012

FMI’s Second Quarter NRCI, 2012

The NRCI index moved up slightly to 59.8, our highest score since its inception. Confidence among panelists in the nonresidential sector continues slowly to improve even though backlogs remain about the same at a median of eight months. Productivity improved slightly, while labor and materials costs continue to increase, thus holding down the NRCI. With the exception of education construction, markets over the next quarter are expected to improve slightly, but it will be hard to see this as a turnaround for at least another year. However, it is an election year.

Since the election and global economic issues will be dominating the headlines this year, we asked panelist to share their opinions on both global and national election year issues that could negatively affect their strategies. On the global issues list, the potential impact of increasing inflation as the result of U.S. monetary policy and the collapse of the European Union topped the list. Other issues, like debt default in Greece or Spain, were important, but much lower on the list of concerns. Topping the list of domestic election-year issues was the need to reduce spending on entitlement programs and to reduce the national debt. It is hard to ignore global issues, but this election, like all politics, will be about national/local issues with foreign policy riding in the back seat.

Since NRCI panelists are all presidents and top executives of construction firms, we thought it would be interesting to see what they might do if elected president of the United States. Tax reform, balanced budgets, cost cutting, entitlement reform and collaboration rather than confrontation were among the most mentioned action items from our panelists. We have listed many other comments in the report. In the meantime, there is still time to learn the words to that old song, “Happy Days are Here Again,” but so far, things are improving in spite of this being an election year.

To read FMI’s Second Quarter 2012 NRCI in its entirety, please click on this link or cut and paste it into your browser: http://hale.sg-host.com/media/pdf/forecasts/NRCI_Q2_2012.pdf.

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