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Survey Finds Small Construction Firms Optimistic

(midwest.construction.com, July 2006 issue)

Small construction companies are more optimistic about economic conditions than other small business, a survey has found.

In its first survey directed at small businesses in the construction/contracting industry, the Northbrook, Ill.-based International Profit Associates Small Business Research Board measured and compared overall small business to this important business segment.

The IPA Small Business Confidence Index (IPA SBCI), which measures expectations about revenue growth, the general economy and hiring looking forward 12 months, stands at 47.3 for all small business.

In the construction/contractor industry, the IPA SBCI is at 49.3 as compared to 44.6 in the nonconstruction businesses in this survey.

The construction industry is more optimistic about the general economy for the next year than small business overall.

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Construction company executives are 23 percent more optimistic than their business peers in the nonconstruction small business sector. Results found 48 percent of those in construction surveyed believed the general economy will improve, compared with 44 percent in overall small business and 39 percent in nonconstruction industries.

When asked to identify the single most important issue to their businesses, 25 percent of those in construction identified the cost of materials as most important.

This compared to 10 percent in nonconstruction businesses.

Conversely, the cost of energy/fuel was cited by 16 percent in nonconstruction small business and only 3 percent of construction/contracting businesses.

Finding quality employees is of major concern to many businesses, but a bit less so in construction.

Overall, 13 percent indicated quality employees is the single most important issue facing them. In construction, 10 percent identified this as the most important issue, while in nonconstruction small businesses, 16 percent of owners and managers identified this as the top issue.

On the hiring front, construction expects to increase hiring more than general small business.

Overall, 39 percent of small businesses expect to increase hiring during the next year. In construction, 43 percent feel they will increase hiring as compared to 34 percent in non-construction industries.

"Growth in the construction sector, coupled with higher costs for construction materials and hiring pressures, will be watched closely by the Federal Reserve as it determines future interest rate policy for the economy in general," said Gregg Steinberg, President of International Profit Associates.