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Blog/September 6, 2013

Nonresidential Construction Index Third Quarter 2013 Highlights

The NRCI Index for Q3 of 2013 = 60.3. Although only 0.2 points higher than last quarter, we can say that this is the highest point since we began the NRCI index in 2007. However, if we had avoided a couple of “current issues” questions this quarter, our report for the third quarter 2013 would look very much like the second quarter. But that’s not a bad result.

Three components continue to hold down a faster rise in the Index: cost of labor and construction materials, and productivity. All three components are in line with national trends for other industries. One problem may be that industries, construction included, are not investing enough in technology, equipment and training that would improve productivity. Rather, there seems to be more reliance on working harder than working smarter. Businesses are understandably shy to make any large investments in an uncertain economy, yet it is exactly those types of investments that are needed to get the economy off dead center and move on.

Our “current issues” questions stirred the pot this quarter as we asked about the immigration/labor bill, the impact of delays in the implementation of “Obamacare,” and the impact of residential growth on nonresidential construction. It is clear in the response that we pressed a couple of hot buttons. Confusion, uncertainty and delay are three words we do not like to hear in business. However, these are issues that our panelists, as well as the rest of the nation, are dealing with. The third one, the connection between residential and nonresidential construction, is less of a hot-button problem than it is a market-forecasting problem. If a close connection between the two existed in the past — say a lag of 16 months after residential picks up, nonresidential is sure to grow — this is not true today, according to the opinions of the majority of our panelists.

To read the report in its entirety, please go to:

http://hale.sg-host.com/media/pdf/forecasts/NRCI_Q3_2013.pdf

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