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ABC Releases Plummeting August Backlog Stats

Tuesday, September 21, 2021

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Last week, the Associated Builders and Contractors released its August Construction Backlog Indicator numbers, reporting that the backlog plummeted to 7.7 in August from the 8.5 that was recorded in July.

“Both contractor backlog and confidence have begun to fade,” said ABC Chief Economist Anirban Basu. “Higher materials prices and labor costs have conspired to put more projects on hold. In many instances, expanding costs have rendered projects infeasible.”

The ABC member survey was conducted from Aug. 19 to Sept. 1. The reading is down 0.8 months from July 2021 and down 0.3 months from August 2020.

chingyunsong / Getty Images

Last week, the Associated Builders and Contractors released its August Construction Backlog Indicator numbers, reporting that the backlog plummeted to 7.7 in August from the 8.5 that was recorded in July.

Falling in most categories over the past month, the backlog revealed:

  • the Commercial and institutional industry, from 8.3 to 7.8;
  • the Heavy Infrastructure industry, from 8.1 to 5.4;
  • the Infrastructure industry, from 11.3 to 7.7;
  • the Northeast region, from 8.2 to 7.4;
  • the South region, from 9.8 to 8.9;
  • the West region, from 9.0 to 7.4;
  • the less than $30 million company size, from 7.9 to 7.4;
  • the $30-50 million company size, from 8.6 to 7.5; and
  • the greater than $100 million company size, from 16.0 to 10.4.

However, the backlog did gain in a few sectors, including the Middle States region (from 7.1 to 7.4) and in companies at $50-100 million (from 10.0 to 10.9).

Despite the slip in backlog, contractor confidence readings for sales, profit margins and staffing levels all remained above the threshold of 50, indicating expectations of growth over the next six months.

“The expected pace of improvement has softened, however,” said Basu. “With so much liquidity continuing to be injected into financial systems, investors have considerable sums to deploy in new investments. Real estate valuations and construction volumes benefit from such dynamics. Recent dips in commodity prices and more normal labor market functioning should help translate into slower cost escalations and rebounding backlog during the months ahead, ultimately reversing the backlog decline sustained in August.”

Previous ABC Numbers, Recent Construction Input

From ABC member surveys recorded in June and July, the association found that its Construction Backlog Indicator rose to 8.5 months in June and remained unchanged the following month.

June’s survey was conducted from June 20 to July 6 and was 0.5 months higher than in May 2021 and 0.4 months higher than June 2020.

An industry breakdown shows a close, but mostly positive outcome from June between increases and decreases. The categories in which the backlog rose were:

  • the Commercial & Institutional industry, from 8.0 to 8.5;
  • the Infrastructure industry, from 8.7 to 10.2;
  • the Middle States region, from 7.5 to 8.0;
  • the Northeast region, from 7.3 to 8.9;
  • the West region, from 7.7 to 8.5;
  • the less than $30 million company size, from 7.6 to 8.0; and
  • the $30-50 million company size, from 6.8 to 8.5.

The categories in which the backlog declined were:

  • the Heavy Industrial industry, from 6.5 to 4.6;
  • the South region, from 9.5 to 8.4;
  • the $50-100 million company size, from 9.5 to 9.4; and
  • the greater than $100 million company size, from 13.4 to 12.8.

July’s ABC member survey was conducted from July 20 to Aug. 2, which is reportedly up 0.7 months from July 2020.

An industry breakdown shows a close, but mostly positive outcome from June between increases and decreases. The categories in which the backlog rose were:

  • the Heavy Industrial industry, from 4.6 to 8.1;
  • the Infrastructure industry, from 10.2 to 11.3;
  • the South region, from 8.4 to 9.8;
  • the West region, from 8.5 to 9.0;
  • the $30-50 million company size, from 8.5 to 8.6;
  • the $50-100 million company size, from 9.4 to 10.0; and
  • the greater than $100 million company size, from 12.8 to 16.0.

The categories in which the backlog declined were:

  • the Commercial & Institutional industry, from 8.5 to 8.3;
  • the Middle States region, from 8.0 to 7.1;
  • the Northeast region, from 8.9 to 8.2; and
  • the less than $30 million company size, from 8.0 to 7.9.

While the seemingly flatline in growth witnessed in both months further suggests a fall in contractor confidence, the ABC reported that the index readings for sales, profit margins and staffing levels remained above the threshold of 50, indicating expectations of growth over the next six months.

At the beginning of the month, ABC found in its analysis of the U.S. Bureau of Labor Statistics’ Producer Price Index that construction input prices rose 0.6% in July, while nonresidential construction input prices increased 0.8% for the month.

When comparing year-over-year prices, ABC reported that construction input prices were 23.1% higher, while nonresidential construction input prices increased 23.4% over the same timeline.

Additionally, energy prices are reportedly continuing to experience substantial year-over-year price increases. The price of natural gas is up 146.7%, while crude petroleum and unprocessed energy materials prices are up 102.9% and 93.8%, respectively. Prices for steel mill products increased 10.8% for the month and are up 108.6% for the year.

   

Tagged categories: Associated Builders and Contractors Inc. (ABC); Business management; Business matters; COVID-19; Economy; Good Technical Practice; Market; Market data; Market trends; NA; North America; Project Management; Projects - Commercial

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