The overall construction environment for the region remains a challenging one. In the Minneapolis Federal Reserve’s latest survey of construction organizations in their ninth district, construction firms reported that while revenue trends remain positive, overall challenges are growing and concerns are increasing.
The survey revealed that while construction firms expect more cancellations this year, they also expect sales to be stronger than last year. When the firms were asked about sales and activity 40% of respondents reported that they expect sales and revenue to be somewhat higher than during the same period last year. Only 21% believed that sales and revenue would be lower than this time last year.
When it comes to projects being canceled, 56% of construction firms responded that they have seen no change in cancellations, while 31% reported cancellations have increased somewhat. That’s an 11% increase from the 20% who reported an increase in cancellations in the Fed’s fall survey.
Delays continue to plague the industry with 67% of firms surveyed reporting an increase in project delays. Of the construction sectors involved in the survey, residential construction firms reported the highest amount of delays. In all, 74% of respondents reported that it is moderately to extremely difficult for their firm to buy and receive critical supplies for their operations in a timely fashion.
With the delays also comes price increases. Of those surveyed, 40% reported that they have seen a greater than 25% increase in wholesale prices from vendors. According to the Minneapolis Fed, wholesale and retail prices are rising more steeply in construction than any other sector.
Despite the increase in cancellations, prices and delays, construction firms continue to be optimistic about the next six months for the industry with 50% of respondents reporting that they are somewhat to very optimistic.