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News/May 23, 2011

FMI Releases NRCI for the Second Quarter, 2011

Nonresidential Construction Index–The Slow Recovery Continues

NRCI = 58.7

RALEIGH, N.C., May 23, 2011 – FMI, the largest provider of management consulting and investment banking to the engineering and construction industry, announces the release of its Nonresidential Construction Index (NRCI) report for the second quarter of 2011.

In spite of adjustments made to accommodate the rising cost of materials, the NRCI moved up 1.4 points to 58.7 for the second quarter. For the fifth quarter in a row, the Index has remained at least slightly in positive territory. The slow, uneven recovery of nonresidential construction mirrors the mixed signals from the national economy, where consumer spending begins to improve just as gas prices skyrocket, and automotive sales start to bounce back as an unparalleled disaster in Japan takes billions of dollars in parts and automotive manufacturing offline.

With the notable exceptions of increasing material and labor costs, most of the major components of the NRCI improved slightly or stayed about the same as last quarter. However, current issues for the Q2 NRCI indicate some challenges to come for nonresidential construction. For instance, 86.5 percent of NRCI panelists favor severe cuts in infrastructure spending if it will help bring the deficit down and promote sustainable government spending even though those contractors stand to lose a lot of potential work. Panelists expect threats and maybe some future opportunities as the markets begin to feel the effects of multiple natural disasters and political upheaval in the Middle East and Northern Africa.

In the meantime, panelists continue to work harder to improve their backlogs, and that effort includes maintaining good relationships with their loyal customers. In this case, the challenges include keeping those loyal customers in the face of low-bid competitors as loyalty is challenged when owners can only see low price. Most panelists expect loyal customers to return as the economy improves, but 26 percent expect to be doing more work with new customers after the recession.

Log on to FMINet.com to download a complimentary copy of the full report: NRCI 2Q 2011

For more information about the report, please contact Sarah Vizard at 919.785.9221 or svizard@fminet.com.

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