Associated Builders and Contractors (ABC) reports that its Construction Backlog Indicator fell 0.1 months in June and stands at 8.9 months, according to an ABC member survey conducted 21 June – 5 July. The reading is up 0.4 months from June 2021.
View ABC’s Construction Backlog Indicator and Construction Confidence Index tables for June 2022.
ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels declined in June. The indices for sales and staffing remain above the threshold of 50, indicating growth expectations over the next six months, while the reading for profit margins fell below the threshold of 50 for the first time since October 2021.
“Several months ago, there was conjecture that contractors were generally too upbeat regarding their collective future,” said ABC Chief Economist Anirban Basu. “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 induce project starts, a growing fraction of contractors have to trim margins.
“While circumstances are hardly catastrophic, the nonresidential construction marketplace is not as strong as it was expected to be,” said Basu, pointing to factors including materials prices that have remained stubbornly elevated and construction skills shortages that have refused to dissipate.
He continued: “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. 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.”
