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ABC: Construction backlog, confidence down in June

By |  July 13, 2022

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The Associated Builders & Contractors (ABC) say its Construction Backlog Indicator fell 0.1 months in June to 8.9 months, according to an ABC member survey.

The reading is up 0.4 months from June 2021.

ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels declined in June. The indices for sales and staffing remain above 50, indicating expectations of growth over the next six months, while the reading for profit margins fell below 50 for the first time since October 2021.

“Several months ago, there was conjecture that contractors were generally too upbeat regarding their collective future,” says Anirban Basu, ABC’s chief economist. “Increasingly, the data suggest that they were. At the time, many contractors reported surging backlog and an ability to pass along hefty cost increases to project owners. For months, contractors expected sales, employment and margins to expand. The most recent ABC survey indicates that, to secure work and to induce project starts, a growing fraction of contractors is having to trim margins.”

Basu adds while the circumstances don’t quantify as catastrophic, nonresidential construction is not as strong as it was expected to be.

“Many factors are involved, including materials prices that have remained stubbornly elevated and construction skills shortages that have refused to dissipate,” he says. “In the context of rising fears of recession and rising borrowing costs, the stage has been set for softer nonresidential construction activity going forward.

“That said, public contractors can expect to remain busy in the context of a significant infrastructure spending package,” Basu adds. “Still, the market may not prove as robust as anticipated given delayed project start dates as public agencies determine the right moment to purchase construction services. Despite all of these considerations, contractors continue to expect industry sales and employment to expand over the next six months.”

Jack Kopanski

About the Author:

Jack Kopanski is the Managing Editor for Pit & Quarry and Portable Plants. Kopanski can be reached at 216-706-3756 or jkopanski@northcoastmedia.net.

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