According to FMI, the NRCI has once again inched higher into positive territory with a score of 65.8, a gain of just 0.9 points over last quarter’s results. That’s another record for the NRCI, but that gain might have been higher if the change in material and labor costs was not included as part of the Index score calculations.
Almost every other component of the NRCI index improved over last quarter. The only exception is productivity, which slipped 1.7 points. Select market predictions Include:
- Overall Economy: Panelists’ view of the overall economy was up just 1.2 points this quarter to 81.1, reflecting what FMI has been seeing for some time now, continued slow growth.
- Overall Economy Where Panelists Do Business: Panelists are somewhat brighter about the growth in the economy where they work as the index moved up a solid 4.9 points to 81.9.
- Panelists’ Construction Business: The local and national economy is doing better according to the panelists, but they do not yet feel they are getting all that goodness. Nonetheless, the index for panelists’ construction business increased 3.6 points to 79.0.
- Nonresidential Building Construction Market Where Panelists Do Business: FMI’s primary focus for the NRCI, the nonresidential building construction market, is continuing to improve, with the index up 6.7 points this quarter.
- Expected Change in Backlog: For the first time since the early part of the recession when backlogs were falling from 12 months down to eight months and fewer for many contractors, FMI now has a reading of 10 months and climbing.
- Cost of Construction Materials and Labor: The index for the cost of construction materials was essentially unchanged this quarter. This is not necessarily good; rather, it is less bad than sharp rises in materials costs. The same cannot be said for labor costs. As the industry rebounds from a long recession, the outlook for talented labor gets tighter and demand for higher wages increases.
- Productivity: The index for productivity improvement continues to linger around the midmark, indicating little or no change as the index dropped from 52.7 last quarter to just 51.0 this quarter. Productivity continues to be a challenge to the industry, and our current issues questions on industry R&D and innovation show the importance panelists place on finding ways to improve productivity.