As a regular feature of The Ram Report, we’ll focus on the various hot button issues affecting the construction industry.
The Dodge Momentum Index, which broadly measures activity in the planning stages for new nonresidential building projects and leads spending in the sector by a full year, fell 1.2% in August. It was weighed down by a 5.2% decline in the institutional sector, which includes education, healthcare, transportation and public and religious buildings.
The Architecture Billings Index (ABI) is a diffusion index derived from the monthly Work-on-the-Boards survey, found that 42% of firms consider stalled, delayed, or canceled projects to be at least a somewhat serious issue.However, all is not gloom and doom. The Associated Builders and Contractors Backlog Indicator, while showing some decline, still remains relatively strong: are preparing for tougher times ahead,” said ABC Chief Economist Anirban Basu. “That is nothing new for an industry that has proven itself to be highly resilient and cyclical in recent decades. Nonetheless, for now, many contractors continue to operate at capacity and are actively looking to hire additional workers to expand capacity. It is simply too soon to conclude that the nonresidential construction industry has entered recession despite recent declines in backlog.” Construction Material Inflation: Is it over? Has it just begun? Is the worst yet to come? It really depends on who you ask and what materials you’re looking for. CBRE expects prices to continue to rise at a record pace as materials remain scarce and the skilled labor market continues to tighten. But the Producer Price Index indicates cross-product stability with some prices, such as lumber, starting to dip. The only thing certain is uncertainty. At a minimum though, at least for the time being, a bit of market stability is nice. Local Market: Growth in Northeast Arkansas remains strong. Every school district in the region is building and actively planning to build more. Growth continues at both NEA Baptist and St. Bernards. Municipalities like Paragould, Jonesboro and Osceola continue with capital improvements. Jonesboro’s industrial sector remains strong and is further buffered by Haag-Brown’s E-Commerce Park. And multiple start-ups are seen at Halsey-Thrasher-Harpole’s Greensboro Village. Work is underway at Osceola’s Big River Steel and we fully expect to see a lot of starts at the Southern Hills development in Jonesboro. No region is recession-proof, but Northeast Arkansas has so many economic drivers we fully expect the region to maintain its status as one of the most recession-resistant regions in the state.