Mixed Feelings on the Outlook of the Construction Industry?

There has been much speculation recently about whether or not the economy is heading for another recession, and if so, when it will occur.  Since the last recession, the Construction Financial Management Association (CFMA) has conducted quarterly surveys of construction executives to quantify a “confidence index” in the industry, known as CONFINDEX.  The CONFINDEX assesses responses from construction executives on several topics including current conditions and future outlook.  According to the CFMA, during the first quarter of 2019, the CONFINDEX reached its lowest level since 2010, primarily due to concerns expressed about labor shortages and workforce issues, rising material costs, and uncertainty surrounding public construction budgets.  

However, since the first quarter of 2019, construction executives have displayed increased optimism due to positive current conditions.  The CONFINDEX for the third quarter of 2019 climbed to its highest level in the last four quarters.  Some of the positive developments noted in the third quarter 2019 report include a larger portion of respondents experiencing profit margin increases, sufficient availability of financing, and Federal Reserve rate reductions, which have lowered the cost of capital.  This is all good news for the industry, at least in the near term.

As for the long term, there is still some concern of a recession starting in 2020 and the fear that workforce issues could drive up the cost of construction, and ultimately lead to postponement of construction projects.   A number of other global economic and political uncertainties are causing consternation in the industry.  Only time will tell whether or not these long-terms fears become reality, but for now, most indications are that the industry is performing well.

If you want to know if your company is well-positioned for the uncertainties that lie ahead, the Schneider Downs Construction Industry Group can help.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2024 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
Postcard from the 38th annual AICPA & CIMA Construction and Real Estate Conference
Construction, ESG BY Matt Hartman
ESG in the Construction Industry: Electrification
“Constructing” Your Estate to Meet Your Needs
New Research and Development Capitalization Requirement Shuffles System
Contractors May Benefit From SALT Cap Workaround
Construction Talent Retention
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us
Pittsburgh

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.

×