CIRT Q3 Sentiment Index Shows Dramatic Uptick in U.S. Economic Outlook
CIRT members were more optimistic about the business environment in the third quarter, lifting the Sentiment Index to 65.9 from 63.5. Much of that improvement came from a brighter economic outlook and easing materials costs. At the same time, expectations for members’ own businesses and backlogs pulled back slightly from last quarter’s high levels. The Design Index also edged down, from 69.6 to 68.7.
Positive overall sentiment toward the U.S. economy posted the most dramatic uptick of any individual measure within the index, rising to 54.6 from 39.8. Nearly a quarter (23%) of participating members expect the national economy to improve next quarter, up from 16% last quarter; only 14% expect it to worsen, down from 37%. The economies where members operate followed the same path, rising to 60.8 from 53.1. However, the index for their own businesses eased to 73.4 from 75.5, which is still among the strongest readings in the survey.
Backlog expectations remain very positive, with 68% of members anticipating an increase next quarter, even as the index receded to 70.8 from 75.5. The cost of materials index also fell to 80 from 94.9, as last spring’s oil price spike faded, with the share of respondents who anticipate materials spending to rise next quarter dropping to 63% from 90%. However, the cost of labor index climbed to 82.3 from 78.6, representing the strongest input pressure in the survey, with two-thirds (67%) expecting labor costs to rise further, while productivity slipped to 50, or neutral.
Data centers again top the construction segment scores at 4 on a 5-point scale, slipping from 4.4 last quarter. This marks the segment’s first decline in the survey, yet it remains the highest of any segment. Industrial (3.8), manufacturing (3.6) and health care (3.6) are also firm; commercial, office and lodging hover near 3. Design expectations are led by industrial (3.8), with residential (2.4) trailing every segment in the survey. Longer-term expectations are generally weighted toward improvement across most segments.
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