FRIDAY, SEPTEMBER 15, 2023
A recent Associated Builders and Contractors report found that its Construction Backlog Indicator declined to 9.2 months in August, down 0.1 month.
Additionally, according to the survey conducted from Aug. 21 to Sept. 6, the reading is 0.5 months above this month the year prior.
“There’s no sign of a construction recession in the near term,” said ABC Chief Economist Anirban Basu. “If anything, contractors are more upbeat, as policy and technology shifts along with economic transformation, are creating substantial demand for improvements and growth in America’s built environment.
The association reports in its press release that the backlog decreased on a monthly basis for all categories of company size except for those with more than $100 million in annual revenues, while only the smallest two revenue categories have higher backlog than in August 2022.
Sectors experiencing an increase in backlog included:
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A recent Associated Builders and Contractors report found that its Construction Backlog Indicator declined to 9.2 months in August, down 0.1 month. |
However, the backlog also witnessed decreases in several sectors, including:
“While a plurality of contractors expects only small improvements in sales, profit margins and staffing over the next six months, even incremental improvement is remarkable in the context of tightening credit, higher project financing costs and lingering fears of recession,” said Basu.
“Backlog continues to be at the upper end of historic levels, with the infrastructure category registering substantial gains in backlog in August. That suggests that a growing number of public works projects is poised to break ground.”
The ABC’s Construction Confidence Index reading for sales, profit margins and staffing levels moved higher in August. All three readings remain above the threshold of 50, indicating expectations of growth over the next six months.
Previous Month Readings
Last month, the ABC reported an increase for the CBI to 9.3 months in July. According to the member survey conducted from July 20 to Aug. 4, the reading was also up by 0.6 months since that time last year.
Additionally, the ABC adds that the South remains the region with the highest level of backlog, despite being the only region with lower backlog on a year-ago basis. Backlog gains in July were concentrated in the commercial and institutional category.
The ABC’s Construction Confidence Index reading for profit margins and staffing levels also reportedly moved higher in July, while the reading for sales fell slightly. All three readings remain above the threshold of 50, indicating expectations of growth over the next six months.
Construction input prices were also unchanged in July compared to the previous month, according to an ABC analysis of U.S. Bureau of Labor Statistics Producer Price Index data. Nonresidential construction input prices reportedly fell 0.1% for the month.
Overall, construction input prices are 3.1% lower than a year ago, while nonresidential construction input prices are 2.7% lower, ABC explains.
However, prices have increased in all three energy subcategories. Natural gas prices were up 11.0%, while crude petroleum and unprocessed energy materials prices increased 8.4% and 8.0%, respectively.
The Associated General Contractors of America analysis found that while contractors are finally seeing some relief from recent supply chain problems and price escalations, the competitive market means key materials are still very hard to find.
According to the AGC release, the impacts from the pandemic and Russia’s attack on Ukraine have slowed, but long lead times reportedly remain for electrical equipment and construction machinery. Cement, lumber, plywood and asphalt coatings are some of the materials showing “persistent” price increases.
The analysis also reportedly found that contractors’ bid prices fell by 1.4% last month. That said, officials continue to express concerns over the new Buy America requirements of the bipartisan infrastructure law.
Tagged categories: Associated Builders and Contractors; Associated Builders and Contractors Inc. (ABC); Contractors; Contracts; Economy; Good Technical Practice; Market; Market data; Market forecasts; Market research; Market trends; Program/Project Management; Projects - Commercial
