Construction industry executives report no change in industry confidence between the first quarter and the second quarter, as ENR’s construction industry confidence index remained at a slightly upbeat 54 this quarter. ENR’s economic index remained static for a third consecutive quarter with a rating of 48.
The confidence index measures executive sentiment about where the current market will be in the next three to six months and over a 12- to 18-month period, on a scale of 0 to 100. A rating above 50 shows a growing market. The measure is based on responses from US executives at major general contractors, subcontractors and design firms on ENR’s top lists to surveys sent between May 4 and June 8.
Firms report slightly less confidence in the current construction market than last quarter, but slightly more confidence in how the market will look 12-18 months from now. In the first quarter, 18.5% of companies saw an improvement in the current market, but that number dropped to 14.4% in the second quarter. Conversely, in the first quarter, almost 20% of companies predicted a declining market in 12-18 months. This figure dropped to 11.1% this quarter.
GC/CMs report the highest confidence levels. Separately, they had a score of 59 in Q2, four points higher than in Q1. Design firms remain the most pessimistic group, but still reported a nine-point increase in confidence, jumping to a stable rating of 50. However, confidence among subcontractors moved in the opposite direction, dropping eight points to a score of 50. Larger firms report more confidence in both the construction market and the broader economy than smaller firms.
Companies self-reporting more than $250 million in revenue scored a 55 on both the trust and economic indexes. Companies that reported less than $50 million in revenue had 48 and 45 ratings, respectively.
The results of the Princeton, NJ-based Construction Financial Management Association’s ConfIndex survey tell a slightly different story than ENR’s. Each quarter, the group consults with CFOs of general and civil contractors and subcontractors about markets and business conditions. The resulting Confindex is based on four separate financial and market components, each rated on a scale of 1 to 200. A rating of 100 indicates a stable market; higher ratings indicate market growth.
Every index the association tracks fell between the first quarter and the second quarter, with the exception of its “current confidence” index, which rose 1% to a rating of 105. The global Confindex fell 2.7% to a rating of 107. The “business conditions” index fell 3.5% to 109 and the “financial conditions” index fell a 1.9% up to a rating of 106.
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The biggest drop came in the “outlook for the year” index, which fell 6.8% to a rating of 110 after three flat quarters, near its June 2025 reading. “A year ago, what are these controllers looking at? They’re looking at rates,” said Anirban Basu, managing director of Sage Policy Group and an adviser to the association. “[CFOs] they were deeply pessimistic a year ago, and now they are more or less pessimistic.
With the war in Iran passing the 100-day mark with no clear end in sight, Basu sees financial professionals working in construction recognizing that the effects of inflation could last longer. “[In Q1] our financial professionals could expect two or three rate cuts this year. Now they’re hearing there’s going to be a rate hike in December, and another at the next meeting after that, and another at the next meeting after that,” he says. “You’ve gone from three rate cuts to three rate hikes in the bond market, 1.5% more than expected. To me, that’s a difference maker.”
The consumer price index rose to 4.2% in May, its highest level since April 2023, the US Bureau of Labor Statistics said.
More than 75% of respondents to the ENR survey report that they are experiencing upward price pressure, up from 63% last quarter. “Almost 80% of [association] Respondents say material prices are worse for them now than a year ago, up from 52% at the beginning of the year,” adds Basu. No surveyed association reports an improvement in material prices. “I don’t think we’ve ever seen an outcome like this before,” he says, adding, “This inflation is very broad in the construction input dimension.”
An overheating economy
Basu doesn’t see a recession anytime soon. “For a recession, either demand has to collapse or supply has to be disrupted,” he says. “COVID-19 was a supply shock. The 2008-2009 recession was a demand shock.” The economist sees too many drivers of demand in the economy, starting with artificial intelligence. “I talk to large general contractors who tell me that ‘a few years ago our data center work was 5% of our book. Now it’s 35%.” Basu also sees the federal government injecting money into the economy.
If anything, he sees the economy overheating, with added jobs and higher input costs and inflation, “but demand remains strong because of rising prices,” Basu explains. He says recent wages in construction have been strong relative to the rest of the economy. “Construction inflation has been worse than general economic inflation for a long time, and yet demand is driving it,” says Basu.
