Construction industries concerned about material costs

The construction industry survey shows greater optimism for economy than overall business sector.

The IPA Small Business Confidence Index (IPA SBCI), which measures expectations about revenue growth, the general economy and hiring looking forward 12 months now 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 non-construction businesses in this survey.

The construction industry is more optimistic about the general economy for the next year than small business overall. Construction company executives are 23% more optimistic than their business peers in the non-construction small business sector. 48% of those in construction surveyed felt the general economy will improve compared with 44% in overall small business and 39% in non-construction industries.

When asked to identify the single most important issue to their businesses, 25% of those in construction identified the cost of materials as most important. This compared to 10% in non- construction businesses. Conversely, the cost of energy/fuel was cited by 16% in non-construction small business and only 3% of construction/contracting businesses.

Finding quality employees is of major concern to many businesses, but a bit less so in construction. Overall, 13% indicated that finding quality employees is the single most important issue facing them. In construction, 10% identified this as the most important issue, while in non-construction small businesses, 16% 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% of small businesses expect to increase hiring during the next year. In construction, 43% feel they will increase hiring as compared to 34% in non-construction industries.

"The differences in expectations of construction executives versus their peers in other industries is striking," said Gregg Steinberg, President of International Profit Associates, the largest privately-held provider of management consulting and professional services to small and medium-size businesses in North America. "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," added Steinberg.