Construction executives remain somewhat pessimistic about the economy, with the Construction Confidence Index — which measures executive sentiment about where the market is headed in the near future — still below 50, which indicates a slow market. A rating of 50 or higher indicates a growing market.
That’s according to a market report released by construction company, general contractor, design-builder and construction manager The Weitz Co., which prepared the report for the American Seniors Housing Association.
“Economic indicators are mixed, and the question remains whether we will have a recession or a soft landing in 2023,” authors Larry Graeve and Kyle Wegner wrote. “Construction executives’ faith in the economy has rebounded significantly, although they are still pessimistic overall.”
“Architecture firm billings remained ‘soft’ for the fifth consecutive month. The pace of decline remains relatively modest, which could indicate a shorter slowdown at firms rather than a more dramatic downturn and full-blown recession,” the report noted.
Factors affecting construction executives’ confidence include recent bank failures and continuous Federal Reserve interest rates, the authors noted.
As McKnight’s previously reported, the Fed is expected to raise interest rates another 25 basis points when it meets next month.
The construction workforce shortage is easing, with the pace of new hires outpacing the rate of job openings. The experts anticipate a one half to one third percent monthly increase over the next six months.
“This provides some relief for employers, however, the need for qualified workers is still very high as older workers from the baby boomer generation retire or switch employment for less physical occupations,” the authors noted.
Materials backlogs, however, remain an issue. Contractor backlogs rose slightly to 9.2 months in the first quarter, from 8.8 months in the fourth quarter of 2022. At the same time, lumber prices have dropped to pre-pandemic levels, at $494 per 1,000 board foot.
