“I think I can. I think I can,” said the Little Engine that Could. At 60.1, we have reached the highest score for the NRCI index since its inception in Q1 2009. This is not yet a bullish trend, but it demonstrates that the nonresidential construction market continues to push upward, just like the Little Engine. Except that the construction industry is a really big engine.
Most of the sub-indexes for the NRCI this quarter showed good positive movement, even though backlogs continue at nine months, not much different than they have been for the last two years running between eight and nine months.
To look at a couple of possible economic derailers of this progress, this quarter, for our current issues questions, we probed panelists’ opinions and experience in two areas: What are the current and expected effects of sequestration on public and private construction, and are panelists seeing the beginnings of skilled labor shortages now and for the next year. We may have been a little early on both questions, but what we are trying to do is to see upcoming trends.
For the sequestration questions, we received a range of answers, but about 19% agree that they are already seeing some decreases in their public work and a little in their private work. However, most expect that this is only the beginning and the uncertainty continues to hold back the economic engine from moving the economy forward.
For labor shortage questions, few are seeing immediate labor shortages, but there are plenty of regional shortages with more expected in the coming year if business continues to improve, especially in some categories such as operating engineers and laborers. For some panelists, the problem is not quantity but quality.
To read the report in its entirety, please go to: http://hale.sg-host.com/media/pdf/forecasts/NRCI_Q2_2013.pdf