FMI releases NRCI for third quarter 2010

RALEIGH, N.C. — At 51.3 for the third quarter of 2010, the Nonresidential Construction Index (NRCI) is in growth territory for the second quarter in a row; however, it retreated somewhat from the more positive outlook of 54.5 last quarter, said FMI Corp.

States and municipalities are expected to make significant budget cuts due to lower tax revenues next year, and the federal stimulus support for the market will start to wind down over the next year. FMI said the concern now is that banks and private investors are sitting back and waiting for stronger signs of economic improvement until they repair their balance sheets.

Although new construction growth is slow to materialize, FMI asked if owners were showing more interest in improvements and alterations projects. Fifty-nine percent of panelists said owners were increasing their interest in projects for general modernization, energy improvement, green and sustainable upgrades and other projects.

According to FMI, this work will not replace new construction business lost in the recession, but will provide new markets for contractors able to focus on this service-oriented work. FMI said it found some strong signs in panelists’ comments this quarter that contractors are becoming more customer-service oriented to assure that they win over new customers and retain current ones.

As the economy continues to look for traction, there is a sense we are facing what everyone is referring to as the “New Normal” where slower growth is the norm along with greater uncertainty, especially in global markets, said FMI.

To learn more or to schedule an interview with the author of this report, please contact Sarah Vizard at (919) 785.9357 or svizard@fminet.com.