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News/November 17, 2011

FMI Releases NRCI for the Fourth Quarter, 2011

Nonresidential Construction Index–Glacial Growth; No Stimulus in Sight; Affordable Health Care Challenges 

NRCI = 50.3 

RALEIGH, N.C., November 17, 2011 – FMI (www.fminet.com), 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 fourth quarter of 2011.

The NRCI slipped from 52.4 to a barely positive 50.3 this quarter. While the stock market continues its gyrations from news surrounding the future of the Euro countries, the NRCI has managed glacial growth, chugging along just about average for the last two years, average being little to no growth. The NRCI dropping to 50.3 this quarter is less a downward trend than a continuation of moderate growth.

Moderate growth does not mean there are not changes going on in nonresidential construction. In past issues, panelists expressed views on the increasing use of new methods and technologies like BIM, prefabrication, modularization, integrated project delivery, sustainable construction, as well as improved productivity and business development. Most contractors are better prepared to deal with these challenges than with abrupt changes in the economy.

Current Issues

Overwhelmingly, NRCI panelists do not expect the American Jobs Act (AJA) and the related National Infrastructure Bank (NIB) bill to pass as now proposed. Even with public construction as part of the AIA, few panelists expected that it would significantly increase their backlogs if passed.

This report also looks into a not-so-new problem, how to pay for rising health care insurance costs. The issue is resurfacing due to the introduction of the Patient Protection and Affordable Care Act, aka Obama Care. Although, the majority of NRCI panelists recognize they will have to share the skyrocketing costs of health care with employees, a few say they intend to drop their policies, pay the penalties and let employees fend for themselves. Twenty percent of panelists have yet to fully examine their options.

Questions about a new jobs stimulus as proposed in the American Jobs Act (AJA) and the related National Infrastructure Bank (NIB) bill show NRCI panelists overwhelmingly do not expect either bill to pass as now proposed. While that means billions of dollars will not be added to the national deficit or to public construction budgets, few panelists expected the AJA, if passed, would significantly increase their backlogs any time soon, if at all.

Bottom line, little to moderate growth for now. However, this doesn’t mean there won’t be significant changes in how the nonresidential construction industry conducts business over the coming months.

Download a copy of the full report. For reprint permission or to schedule an interview with the author, please contact Sarah Vizard Avallone at 919.785.9221 or savallone@fminet.com.

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