We recently conducted a poll to gauge the outlook of construction executives for the civil construction market over the next 12 months. The results reveal a mixed bag of expectations and sentiments, reflecting the complex factors influencing the sector today. Here is a detailed breakdown of the findings and an analysis of what they might mean for the construction industry moving forward.
Poll Results Breakdown
Taylor Maurer, Founder and Senior Managing Partner for Heavy Civil Resource Consultants, shared the findings of our quarterly poll. At the end of every quarter, we ask construction executives about their outlook for the civil construction market over the next 12 months. The results are as follows:
- 19% predict strong growth
- 41% foresee moderate growth
- 35% expect the market to stagnate
- 6% think the market will shrink
Comparison with Previous Periods
To provide context, we compared these results with those from the previous quarter and the same period last year:
Last Quarter:
- 24% expected strong growth
- 42% predicted moderate growth
- 28% foresaw stagnation
- 5% anticipated the market would shrink
Last Year:
- 26% expected strong growth
- 42% predicted moderate growth
- 22% foresaw stagnation
- 10% anticipated the market would shrink
Interpretation of the Data
The data indicates a slight shift towards a more pessimistic outlook compared to both the previous quarter and the same period last year. The percentage of executives predicting strong growth has decreased, while those anticipating stagnation and shrinking have seen a slight uptick.
Strong Growth Predictions:
- Down to 19% this quarter from 24% last quarter and 26% last year.
Stagnation Expectations:
- Up to 35% this quarter from 28% last quarter and 22% last year.
Market Shrinkage Predictions:
- Slight increase to 6% this quarter from 5% last quarter, though still lower than 10% last year.
Economic Context and Influencing Factors
Despite the more negative outlook, several factors suggest a disconnect between market conditions and executive sentiment:
- Stock Market Performance: The stock market is performing exceptionally well, which typically signals economic strength and investor confidence. The Dow recently crested over 41,000 points for the first time.
- Construction Unemployment Rate: The construction unemployment rate is at its lowest all year, currently at 3.3%, indicating strong demand for labor and ongoing project activity. In June, 27,000 jobs were added in the construction sector, according to the AGC.
- Interest Rates and Federal Policies: The Federal Reserve is expected to lower interest rates, which should stimulate the economy and investment, especially in the private sector.
Factors Contributing to a Cautious Outlook
- Political Uncertainty: With an upcoming election, political uncertainty may be causing some executives to adopt a more cautious outlook. Historically, elections can lead to temporary market volatility and hesitancy in business decisions.
- Market Peak and Natural Downturn: Some respondents might feel that the market has reached a peak when interest rates were at an all-time low and anticipate a natural downturn on the horizon. This sentiment could be driving higher predictions of stagnation and a slight increase in expectations of shrinking.
Conclusion
While the current sentiment appears more negative than in previous periods, it’s important to remember that market predictions are inherently uncertain. The actual performance of the civil construction market will depend on a myriad of factors, including economic policy, global events, and technological advancements. Despite a cautious outlook, there is still reason to be optimistic. The record high Dow and low unemployment rate are strong indicators of underlying economic health, and interest rate cuts are typically designed to spur growth, potentially reversing some of the current pessimistic trends.
