2020 CIRT Sentiment Index: Third Quarter Report

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The third quarter of 2020 experienced a return of optimism in both the overall Sentiment Index and in the Design Index segment when compared with last quarter’s results. The Sentiment Index surged from 21.6 to 52.1, while the Design Index increased from 39.8 to 49.3, historic rises in both measures. This rebound appears to reflect improved confidence through the end of the year, particularly compared to the significant losses experienced during the second quarter. Government stimulus, relaxing of social distancing restrictions, states reopening businesses and travel, as well as improved client confidence have all contributed to improved expectations, especially across construction-focused members. However, if the Design Index continues to remain below 50, it would tend to indicate or suggest fewer construction opportunities in the future.

Over the past quarter, CIRT members were asked, on an ongoing basis a series of questions addressing organizational response and industry impact of the various economic disruptions seen through the first half of the year (including COVID-19, depressed oil prices, market volatility, etc.). Since March, nearly all respondents have limited business travel and staff exposure both on-site and at the office, while nearly half have reduced staff and overhead.

Notwithstanding over time, it is encouraging to track receding organizational response, particularly fewer postponed spending decisions, meetings and project schedules. Similarly, fewer project disruptions over time have been associated with state and local restrictions, resource availability and/or decline in labor productivity. However, industry demand modifications over the same periods indicate an increasing share of respondents have experienced postponed or canceled projects due to shifting owner- or economy-related dynamics.

Current issues topics in this quarter’s survey addressed perceived change in worker productivity, compensation adjustments, sources of news information and U.S. versus international recovery. Just over half of all respondents reported productivity declines on active job sites following social distancing policies (52%), and just under one-third reported lower productivity among office staff (31%). Going forward, most remote work policies will include more flexibility (89%). For domestic and international social, economic and political news, respondents primarily rely on newspapers (62%) and television news networks (52%). For design and construction industry news, respondents most frequently utilize internet news aggregators (65%) and magazines (59%). Lastly, fifty percent of respondents expect the U.S. will recover faster compared to other foreign countries, while (23%) see the timing about the same with another (21%) that suggest recovery timing and performance will be mixed. Only (5%) expect U.S. will be slower compared to other foreign countries.

Among the industries represented by CIRT’s member base, lodging, office, education and international work are projected to experience the biggest short-term declines across both the design and construction industries. The design industry’s long-term view of project growth remains positive, with every sector tracking above 3.0. The construction industry’s long-term view is similarly optimistic, with just two of the 10 sectors projected below 3.0 (lodging and office).

CIRT SENTIMENT INDEX AND DESIGN INDEX SCORES FROM Q3 2018 TO Q3 2020

ABOUT THE CONSTRUCTION INDUSTRY ROUND TABLE (CIRT)

The Construction Industry Round Table (CIRT) is composed exclusively of approximately 115-120 CEOs from the leading architectural, engineering and construction firms doing business in the United States.

CIRT is the only organization that is uniquely situated as a single voice representing the richly diverse and dynamic design/construction community. First organized in 1987 as the Construction Industry Presidents’ Forum, the Forum has since been incorporated as a not-for-profit association with the mission “to be a leading force for positive change in the design/construction industry while helping members improve the overall performance of their individual companies.”

The Round Table strives to create one voice to meet the interests and needs of the design/construction community. CIRT supports its members by actively representing the industry on public policy issues, by improving the image and presence of its leading members, and by providing a forum for enhancing and developing strong management approaches through networking and peer interaction.

The Round Table’s member CEOs serve as prime sources of information, news and background on the design/construction industry and its activities. If you are interested in obtaining more information about the Construction Industry Round Table, please call 202-466-6777 or contact us by email at [email protected].

CIRT SENTIMENT INDEX

The CIRT Sentiment Index is a survey of members of the Construction Industry Round Table conducted quarterly by FMI Research, Raleigh, North Carolina. For press contact or questions about the CIRT Sentiment Index, contact Mark Casso at [email protected].

CONFIDENTIALITY

All individual responses to this survey will be confidential and shared outside of FMI only in the aggregate.

All names of individuals responding to this survey will remain confidential to FMI.

Brian Strawberry is a senior economist with FMI. Brian’s expertise is in economic and statistical modeling. He leads FMI’s efforts in market sizing, forecasting, and building product/construction material pricing and consumption trends. The combination of Brian’s analytical skills and creative problem-solving abilities has proven valuable for many contractors, owners and private equity groups as well as industry associations and internal research initiatives. Brian can be reached at [email protected].

Emily Beardall is a senior analyst for FMI’s strategy practice. Emily is responsible for creating and developing tools to deliver innovative solutions for our clients. She is committed to utilizing these strategic tools to improve company performance and profitability. Emily can be reached at [email protected].