Contractor outlook: Steady, but guarded
By
Nick Wakeman
In our fourth installment of our WT Contractor Confidence Index, we find that contractors remain generally upbeat about the market, but there are still some worries around budget pressures and the impact of a new administration.
In our fourth installment of our WT Contractor Confidence Index, we find that contractors remain generally upbeat about the market.
Our Index number has dropped to 100.5 for the fourth quarter of 2015 from 101.9 in the previous quarter, but that's still higher than the 97.3 measured in the second quarter of 2015.
We launched our quarterly index in March 2015 and it began with a baseline of 100. The scores since then have measured the change up or down from that baseline.
Some of the positives to note is that a small percentage – 15.5 percent – expect their company's revenue to shrink in the next six months and only a few more – 16.1 percent – of the 168 people who took our survey felt that investment would shrink. Another positive sign is that only 19.3 percent expected hiring to slow down in the next six months.
But on a negative note: 24.2 percent are expecting layoffs or other cost cutting in the next few months.
As you'll see in the charts below, job satisfaction is high at 62.4 percent, though that is a drop from 68.4 percent last quarter.
Respondents are nearly evenly split on the direction of the market with 31.1 percent saying it is headed in a positive direction and 29.8 percent saying it is headed in a negative direction. The rest – 39.1 percent – say it is about the same as last year.
But the split is a positive sign when you compare the results to last quarter. The negatives have dropped slightly (from 30.9 percent to the current 29.8 percent) but the positives have increased significantly (a rise from 25.7 percent to 31.1 percent.)
Some of the written responses to this question also provide insights about the mood of the market. Several mentioned the passage of the omnibus budget and that budget cuts seem to be leveling off.
Some see defense spending increasing as global threats continue to be an issue, which will create opportunities for contractor support.
Others had negative views feeling that budget pressures will continue and that lowest price contracting is still a drag on contractors.
"The last two years have been painful," one wrote.
Others are concerned about a slowdown as one administration ends and we transition to the next president in early 2017.
But with the overall Contractor Confidence Index remaining over 100, the general mood in the market is positive, but a little guarded.
As always, we look forward to your comments.
Do you feel the market is headed in a positive or negative direction?
Do you expect your company's revenue to grow, shrink or stay the same over the next six months?
Do you expect your company's infrastructure investments to increase, decrease or stay the same?
Do you expect your company's hiring to increase or decrease in the next six months?
Do you expect your company to announce layoffs or other cost-cutting strategies in the next six months?
Are you happy/satisfied with your job?
Are you currently looking for a job?
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