Articles

Construction Industry Confident for Recovery in 2011, Says Engineering News-Record Survey

Category: Business

Written by McGraw-Hill Construction

Created on Wednesday, 30 June 2010 14:52

Construction Industry Confidence Index at 41, up 7 points in 3 months

NEW YORK, June 29 /PRNewswire/ -- Construction professionals expect the industry recession to start to turn around by the end of the year, according to a survey in this week's issue of Engineering News-Record (ENR) magazine and on ENR.com, published by McGraw-Hill Construction. The ENR Construction Industry Confidence Index (CICI) for the second quarter of 2010 shows that construction and design firm executives believe the worst may soon be over.

The Q2-2010 CICI, which measures industry sentiment for market sectors and trends, is 41 on a scale of 100, where a value of 50 indicates a stable market and a value from 51 to 100 reflects the belief that the market is improving. While still below an index of 50, the index shows a dramatic improvement over last quarter (up seven points from 34 in Q1-2010) and last year (up 16 points from 25 in Q1-2009). The index is based on 555 responses to surveys sent to more than 2,000 domestic firms on ENR's lists of leading contractors and engineering firms.

"ENR's CICI survey found confidence gains in 13 of the 15 construction market sectors it measures," said Janice L. Tuchman, editor-in-chief of Engineering News-Record. "The only exceptions were in the petroleum market, which fell from 51 to 44 in the wake of the BP oil spill, and the transportation sector, which dropped from 55 to 54 due to concerns about the stalled federal highway reauthorization bill."

When assessing the construction market, 53% of respondents say the current construction market is still in decline, 36% believe it has stabilized, and 11% believe it is improving. However, survey respondents expect the picture to be different in 12 to 18 months, with 50% believing the construction market will be improving and another 39% believing it will stabilize in 2011.

The CICI survey also asked participants about the ease of obtaining project financing and found that securing financing continues to be a challenge, although the responses were slightly more positive than last quarter. Still, 39.3% say obtaining project financing is tougher than six months ago (vs. 50.7% who answered this way in Q1), and 13.0% say project financing is getting easier, compared to 7.2% in Q1. The industry is also worried about inflationary pressures once the market turns around, but half of respondents said they have seen little or no upward pressure on prices.

The next quarterly survey results will be available in September 2010. For more information and methodology, visit http://enr.ecnext.com/coms2/article_bmfi100623ConfidenceSu

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