FMI Corp.

Nonresidential Construction Growth Slowing Down

FMI's 2014 Second Quarter Nonresidential Construction Index report (NRCI) shows slight improvement of a 0.9 point increase from Q1 and a 5.7 point increase from Q2 2013. Although growth continues, it is beginning to slow indicating that the economy still holds a lingering recession mentality. The largest repercussion of this mindset is that it keeps companies from investing, banks from lending and consumers from spending. Thus, the pressure to keep prices low continues along with the need for greater profitability, leading to two key challenges:

  1. How to improve productivity
  2. Where to find qualified personnel

A 1.7 point decline in the productivity component of the NRCI is indicative of these challenges. To answer these issues, deliberate time must be spent on new ideas, innovation, and R&D. However, 47 percent of industry panelists indicate that their company does not have an ongoing research and development effort. This suggests an opportunity exists to improve market position for those companies that can be the most innovative.

When panelists were asked where the industry most needs to focus future innovation, one industry leader responded, “On anything that makes construction more productive. More productivity means less labor is needed on-site during a time of real labor shortages.”

Download FMI's 2014 Second Quarter Nonresidential Construction Index report

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