ABC: Construction backlog steady, confidence up in August

The Associated Builders & Contractors’ (ABC) Construction Backlog Indicator (CBI) remained unchanged at 8.7 months in August, according to an ABC member survey – a full month higher than August 2021.

The backlog is down from the second quarter of 2022, but it remains higher than at any point from March 2020 to March 2022. While the CBI reading fell for contractors in the South in August, it remains the U.S. region with the lengthiest backlog.

ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels increased in August. The index for profit margins bounced back into positive territory while the sales and staffing level indices remained above 50, indicating expectations of growth over the next six months.

“Despite the high risk of recession, contractors collectively expect sales, employment and profit margins to grow over the next six months,” says Anirban Basu, ABC’s chief economist. “Backlog is down from the cyclical peak in early 2022 and has been roughly flat in recent months.”

The resiliency of nonresidential construction in the U.S. continues to impress Basu.

“Rising interest rates have already driven the single-family homebuilding market into recession, but brisk nonresidential activity continues,” he says. “Many nonresidential contractors are operating at capacity, and their principal frustrations relate to supply-side issues like worker shortages, equipment delivery delays and elevated materials prices, as opposed to demand for their services.”