Dive Brief:
- Construction CEO confidence trends a little lower than the responses from CEOs on a national scale, according to peer-to-peer membership and executive coaching organization Vistage's Q2 2018 CEO Confidence Index Survey. Construction executives generally reported more optimism when it came to hiring expectations for the coming year and their views of the economy in the past year tended to be more positive.
- According to the survey results, 66% of construction CEOs thought the national economy improved during the last year versus 64% of overall respondents, and 64% planned to grow their workforces in the next year versus 61% overall. Only 31% of construction CEOs responded that the national economy would improve in the coming year (32% overall); 44% said they would increase investments (48%); 72% expect to increase revenue (78%); 57% said profits should rise (62%); and 70% said they expect to raise their prices (56%).
- Contractors rejected the premise that radical innovation was necessary to achieve success but instead 73% said success depends on developing efficiencies that save time and money. A little more than half of the respondents said making improvements to their existing offerings was the key to winning as a company. Construction companies with revenue of between $10 million and $20 million last fiscal year and those with between 100 and 499 employees represented the majority of survey respondents.
Dive Insight:
Recent construction surveys have expressed a cautiously optimistic look at the industry's prospects for the next year or so, but there appears to be a growing consensus that the seemingly unfettered growth that the industry has enjoyed during the last several years will soon slow.
For example, Engineering News-Record's second-quarter Construction Industry Confidence Survey showed that construction executives, while upbeat about the industry in the short-term despite challenging labor conditions and rising material prices, are guarded when making enthusiastic projections about the long-term.
The biggest concern among those responding to the ENR survey was about materials, with more than 86% saying they are experiencing rising prices, a figure which is 12% higher than in the publication's first-quarter survey. This apprehension has likely been exacerbated by President Donald Trump's tariffs on steel and aluminum imports. Close to 30% of respondents said the construction industry would still be in expansion mode in the 12 to 18 months ahead, but only 16% said the industry would still be growing in three years' time, with 35% predicting a contraction.
