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News:

Survey Says Construction Industry Market Confidence Steady

By Gary J. Tulacz
This story original appeared on ENR.com
June 22, 2012
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Binstock says the CFMA survey shows the industry is concerned but not overly worried about the direction the market is heading. "The most consistent theme we hear is that banks continue to hold back on project lending," he says.

The Confindex still remains generally positive. "In completing the numeric portion of our survey, CFOs tend to focus on their firms' specific markets and finances, rather than react emotionally to the headlines," says Anirban Basu, CEO of economic consultant Sage Policy Group Inc., Baltimore, and CFMA economic adviser.

"For example, over the last quarter, we have had bad news out of Europe, low job growth and a higher unemployment rate here, and unrest in the Middle East," Basu notes. The Confindex shows that CMFA members view the recent gloomy economic and political news as cause for concern but not as catastrophic, he says.

Project financing is still a major problem for the industry, but there are signs that credit may be loosening. As part of the CICI survey, ENR asked whether financing for projects is more or less available that it was six months ago.

Survey respondents continue to believe project financing has stabilized. In the second quarter, 23.2% said that project financing was getting easier, up from 21.1% in the first quarter, while only 15.2% in this quarter said is was tougher, down from 16.6% last quarter. However, project financing remains tight; until it becomes more readily available, the recovery will be slow.

Among the individual sectors, the survey shows that respondents are a little less confident in primarily private-sector markets than they were in the last quarter, which may reflect concerns about the overall economy. The biggest drop was in the petroleum sector, which fell from a CICI rating of 76 in the first quarter to 68 in the second quarter. Power also saw a major decline, to 66 from 71.

Other declines include environmental (down five points, to 55), multi-unit residential (down three, to 68), retail (down two, to 49), transportation (down two, to 50), health care (down one, to 68) and industrial (down one, to 62).

Some of the weakest markets seem to be gaining strength. The market perceived to be the weakest, entertainment and cultural, rose five points, to 46. Other gainers were higher education (up three, to 56), K-12 education (up two, to 46), commercial offices (up two, to 49), and hotels and hospitality (up two, to 53).

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