THURSDAY, NOVEMBER 16, 2023
The Associated Builders and Contractor’s Construction Backlog Indicator for October is reportedly at the lowest level since the first quarter of 2022.
Based on the member survey conducted from Oct. 19 to Nov. 2, the decline to 8.4 months is also down 0.4 months from this time last year.
“While larger contractors continue to disproportionately benefit from a bevy of megaprojects around the nation, many smaller contractors are feeling the sting of weaker economic fundamentals in struggling commercial real estate segments,” said ABC Chief Economist Anirban Basu.
“Smaller contractors are often the ones most dependent on developer-driven activity. With developers facing both higher borrowing costs and greater difficulty lining up project financing, backlog among some contractors is beginning to dissipate."
Declines were reportedly concentrated among the smallest contractors, those with less than $30 million in annual revenues. All three other revenue categories, however, experienced an increase in backlog in October.
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The Associated Builders and Contractor’s Construction Backlog Indicator for October is reportedly at the lowest level since the first quarter of 2022. |
The backlog revealed an increase in numbers over several sectors, including:
The backlog also fell in a variety of sectors, including:
“This is precisely what ABC economists predicted,” said Basu. “The vast majority of contractors could boast healthy backlog, especially those working in the manufacturing/industrial, infrastructure, data center and health care segments. But those tied to the office, shopping center and multifamily markets are likely experiencing difficulty lining up work.
“This helps explain declines in the readings for ABC’s Construction Confidence Index in all three dimensions: sales, employment and margins. Each of these readings, however, remains above 50, suggesting that, while industry growth is softening, it has yet to enter contractionary territory.”
ABC’s Construction Confidence Index readings for sales, staffing levels and profit margins fell in October. All three readings remain, however, above the threshold of 50, indicating expectations for growth over the next six months.
September Report
Last month, the ABC found that the CBI declined to 9.0 months. Previously, in August, the CBI reported that the backlog was down from the levels of the second quarter of 2022.
Though it declined from the month prior, the South region reportedly continues to have the lengthiest backlog, which has been the case since October 2021. Over the past year, only the West has reportedly experienced increasing backlog.
The backlog revealed an increase in numbers over several sectors, including:
The backlog also fell in a variety of sectors, including:
The CCI reading for sales and staffing levels reportedly moved higher in September. The profit margins reading fell slightly. All three readings reportedly remain above the threshold of 50, indicating expectations for growth over the next six months.
Tagged categories: Associated Builders and Contractors; Associated Builders and Contractors Inc. (ABC); Business conditions; Contractors; Economy; Good Technical Practice; Market; Market data; Market forecasts; Market trends; Program/Project Management; Projects - Commercial