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ABC: Construction Backlog, Confidence Up

Friday, November 13, 2020

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The Associated Builder and Contractors reported earlier this week that its Construction Backlog Indicator rebounded to 7.7 months in October—an increase of .2 months from September.

These numbers are according to an ABC survey conducted from Oct. 20 to Nov. 5. The ABC notes that the backlog is 1.2 months lower than October 2019. (September 2020 was 1.5 months lower than September 2019.)

The Numbers

The backlog increased in many metrics, including:

  • Commercial & Institutional – from 7.4 to 7.5;
  • Infrastructure – from 7.4 to 9.1;
  • Northeast States – from 7.4 to 8.4;
  • West States – from 6.3 to 8.3;
  • Company size of $30 million or less – from 6.9 to 7.4; and
  • Company size of $50 million to $100 million – from 7.2 to 7.8.
photovs / Getty Images

The Associated Builder and Contractors reported earlier this week that its Construction Backlog Indicator rebounded to 7.7 months in October—an increase of .2 months from September.

“Given political uncertainty, surging COVID-19 infections, a lack of additional stimulus, diminished state and local government tax revenues, tighter lending conditions and poor commercial real estate fundamentals, nonresidential contractors remain surprisingly upbeat,” said ABC Chief Economist Anirban Basu.

“Both sales and staffing levels are expected to climb over the next six months. While profit margins are expected to slip, only 6% of contractors expect a large decline in margins. Backlog was down in October from the same time one year ago but up for the month, further indicating a level of industry stability that was not fully anticipated.

As Basu mentioned, many metrics in the Construction Confidence Index also increased from September including:

  • Sales – from 51.3 to 52.7;
  • Profit Margins – from 44.0 to 47.1; and
  • Staffing – from 54.4 to 56.6.

“While these remain treacherous times, nonresidential contractors can anticipate a better future, at least eventually,” said Basu.

“Further stimulus seems likely, including additional monies for infrastructure. Large tax hikes now seem unlikely, helping to explain a surge in stock values despite incomplete information on election outcomes. Interest rates remain low, and the Federal Reserve remains accommodative. Moreover, most economists expect a significant rebound in economic activity in 2021, especially after winter’s end. That will set the stage for an eventual recovery in commercial construction spending.”

Previous Numbers

September’s reading was a decline of .5 months from August.

At that time, the backlog slipped slightly by most metrics from August to September, including:

  • Commercial & Institutional – from 7.8 to 7.4;
  • Infrastructure – from 9.6 to 7.4;
  • Middle States – from 7.0 to 6.7;
  • Northeast States – from 7.7 to 7.4;
  • West States – from 8.9 to 6.3;
  • Company size of $30 million or less – from 7.4 to 6.9;
  • Company size of $50-100 million – from 9.2 to 7.2; and
  • Company size of $100 million or greater – from 11.4 to 10.1.

   

Tagged categories: Associated Builders and Contractors Inc. (ABC); COVID-19; Economy; Good Technical Practice; Jobs; NA; North America

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