Building under construction, workers and construction technical vector illustration
By Ed Avis
I’ve had conversations with a half dozen APDSP members over the past couple of weeks, and nearly everyone has said that business is picking up. They say construction is returning to their communities and customers are ordering prints again. Customers may not be ordering prints in as large a quantity as in the good old days, but more construction does still mean more printing, at least for these members.
This information about growing construction is good news, but anecdotal. What do the experts say about AEC business for the rest of the year? Take a look:
Dodge Data & Analytics surveys civil contractors quarterly about how they’re feeling, and many are optimistic. The biggest sign is that 65 percent said they have “High/Very High Confidence” in new business over the next 12 months.
“This shows growing optimism among contractors, especially as it comes after confidence already grew six points in Q4 2020 over the Q3 level,” the Dodge Civil Quarterly report said. “Civil contractors increasingly expect the market to improve. This increased optimism in their outlook for the next 12 months also supports the theory that many think the impact from the pandemic has leveled off by Q1 2021.”
Interestingly, however, the 12-month confidence level of civil engineers (as opposed to civil contractors) slipped a little in Q1. Only 63 percent reported high confidence in the market in Q1, compared to 68 percent in Q4 2020. The 24-month confidence level of civil engineers, on the other hand, remained a solid 76 percent in Q1, the same as it was in Q4 2020.
“Civil construction declines and recoveries often lag behind overall economic forecasts, given the funding process and cycle for much civil work,” the report said. “With the economic recovery expected to take hold in the latter half of 2021, it is not surprising that engineers are more confident in the longer range forecast.”
The AIA Billings Index from the American Institute of Architects bumped into positive territory in February for the first time since the pandemic started.
“The February report maintains the momentum of the nearly three-point bump seen in the previous month, coming in at an ABI score of 53.3, a substantial rise compared to January's 44.9 and the first positive score since February 2020,” the AIA said. “A score above 50 indicates an increase in billings and is an indication that more construction projects are moving into the planning stages.”
Another good sign from the AIA Billings Index is that new project inquiries rose for the third month in a row. That index stands at 61.2, which is a 22-month high. That’s good news for long-term building trends.
Associated Builders and Contractors tracks a number of construction economic indicators, and it reported on April 13 that the Construction Confidence Index increased for all three areas: sales, profit margins, and staffing. The figures were 65.8 for sales; 53.7 for profit margins; and 63.7 for staffing. Each of these figures was 1 or 2 points higher than the reading in February.
The ABC’s Construction Backlog Indicator, however, slipped slightly in March to 7.8 months, compared to 8.2 months in February. This figure measures how much backlogged work builders have.
“There are two countervailing forces influencing backlog,” said ABC’s Chief Economist Anirban Basu. “On the one hand, design work on new projects declined during most of the pandemic. Some of this is attributable to the need to socially distance, risk aversion and the jarring effects of the crisis on commercial real estate. The result has been fewer projects presently available for bid, which is consistent with declining backlog. On the other hand, the surprisingly strong economic recovery has brought projects that seemed dead back to life. The boom in e-commerce and other tech segments has also produced greater levels of demand for construction of fulfillment and data centers. The overall result is that backlog is roughly where it was six months ago. Given that contractors remain confident regarding sales, employment and profit margins over the balance of the year, the expectation is that more projects will enter the design phase, bidding opportunities are set to rise and at some point backlog will reestablish an upward trajectory.”
So there you have it: The experts seem to back up what APDSP members are saying anecdotally, that construction is picking up and looks to keep increasing throughout the year. That’s no guarantee that more plan printing will follow, but more construction is definitely a good sign.