U.S. construction industry leaders are somewhat less confident about near-term prospects for nonresidential construction, but remain “reasonably upbeat.” The info comes courtesy of the June 2019 Construction Confidence Index (CCI) released earlier this month by Associated Builders and Contractors (ABC).
While contractors are less optimistic regarding sales, profits, and staffing levels on a monthly basis, all three principal components measured by the ABC survey remained well above the diffusion index threshold of 50 in June. Nearly 67% of contractors expect sales to rise during the next six months, while more than 59% expect staffing levels to increase and 54% expect profit margins to expand.
• The CCI for sales expectations decreased from 70 to 65.3 in June.
• The CCI for profit margin expectations fell from 62.8 to 61.3.
• The CCI for staffing levels fell from 66.8 to 64.6.
“Economists near and far are searching for signs of the next economic downturn,” said ABC chief economist Anirban Basu. “Among the signals are increasingly volatile financial markets, an inverted yield curve, unemployment that sits meaningfully below its natural rate, and a variety of indicators suggesting that the global economy continues to soften. Many economists continue to predict recession within the next one to two years…What is perhaps most impressive is the expectation that profit margins will continue to rise. This is an indication that contractors continue to enjoy pricing power, helping to offset the impacts of rising wage pressures.” Click Here for the full ABC Press Release.
Denver Airport Contractor Responds
A major renovation at Denver International Airport (DIA) hit a well reported snag when airport officials sent a written notice of Termination for Convenience to the contractor handling the revamping of the main terminal. The contractor consortium, Great Hall Partners, issued the following response on its web site.
On August 12, 2019, Great Hall Partners LLC received a formal written notice of Termination for Convenience from the City and County of Denver (the Owner) notifying the GHP’s that it has elected to exercise its discretionary right to terminate the contract in accordance with the terms and conditions of the Development Agreement with effect 12 November 2019.
We are disappointed that we were unable to find a mutually acceptable resolution to the serious issues that have impacted this Project, which include the discovery of weak concrete in some areas of the terminal and more than 20 large in scale, badly timed and unnecessary change directives issued by DEN to the design they had previously approved.
Since November 2018, we have made good faith attempts to reach a mutually acceptable resolution with DEN and Mayor Hancock’s office, and it has always been our strong desire to resolve these issues in order to deliver the Project.
We would have preferred to work with DEN to bring this Project to execution, but will continue to cooperate fully with DEN to ensure a smooth transition.
The Termination for Convenience shall entitle Great Hall Partners to a compensation as stated in section 21.2 of the Development Agreement.