FMI, a management-consulting and investment-banking firm that focuses on the construction industry, said its nonresidential-construction index for the first quarter suggests a slight improvement from the fourth quarter of 2009.
FMI said the index rose to 48.4 from the fourth-quarter 2009 reading of 47.7. Readings below the index’s baseline of 50 indicate that construction activity remains weak, while readings above 50 indicate growth. The index is based on a survey of approximately 160 top executives of construction companies involved in nonresidential building.
“The improvement may be attributed to the panelists’ trust in a continuing upswing in the economy,” the firm said.
“While health-care construction is the only construction market showing relative strength this year, most panelists predict improvements for next year, with the exception of the lodging and office markets,” FMI said in comments on the index. The panel’s majority–52%–still expects reductions in staff for 2010, compared to the 64% that were downsizing this time last year. Those reductions, however, will be less drastic, with most being less than 5% of staff, the survey suggested. “Even though reductions still loom, some construction executives are making strategic hires to prepare for certain market improvement,” FMI said.
“Overall, we think we are seeing signs of recovery in the responses to this quarter’s survey, but that recovery could be very slow, especially if financial institutions continue to keep a tight rein on loans and owners are reluctant to build once their markets improve,” FMI said.