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Nonresidential Construction Continues Decline
Posted by MSC on January 2, 2009 at 12:50 PM.

The fourth quarter (2008) FMI Nonresidential Construction Index (NRCI) survey was conducted, as the financial crisis moved from Wall Street to Main Street. The results of the construction management consulting provider’s quarterly survey of construction industry executives show the effects of the troubled financial markets now spilling over to the nonresidential construction sector. The NRCI dropped 10.6 points to 34.1 since the third quarter. Panelists also indicated they expect significant declines in municipal construction budgets due to financing difficulties and reduced tax receipts for 2009. Uncertainty in the markets and further delays and cancellations will mean lower revenues for contractors working in the nonresidential construction sector for 2009. Highlights of the NRCI included:

 

  • 85% of panelists reported the overall economy as worse than last quarter
  • 71% of panelists agreed that the economy in their geographic regions was worse than last quarter, an indication that there are few corners of the country now bucking the national economic trends
  • Until the fourth quarter, panelists’ business looked better than the national and regional business scenes. As of the fourth quarter, only 4.6% said their business has improved over last quarter
  • The “cost of materials” component of the NRCI made a significant improvement to move the component score above the neutral range of 50.0 to 53.4, signaling lower material costs for the near term
  • Labor costs slightly improved, as 22% of panelists reported higher labor costs compared with the previous quarter
  • 20% of panelists expect revenues to be as much as 16% or more lower for 2009 due to the turmoil in the financial/credit markets
  • 32% of panelists expect municipal budget cutbacks for 2009 of 5% to 10%


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