Associate Builder and Contractors Backlog Indicator Increases to 9 Months in September

The Associated Builder and Contractors (ABC) reported on Tuesday (10-11-22) that its Construction Backlog Indicator increased to 9.0 months in September. This figure is based on an ABC member survey conducted between September 20th and October 5th. Year-over-year the reading is 1.4 months higher than in September 2021.

The backlog reached its highest level since May 2022 and is once again above the level seen at the start of the pandemic (8.9 months in February 2020). The backlog in heavy industrial increased significantly in September, led by a 21.5% year-over-year increase in manufacturing-related construction spending.

ABC’s Construction Confidence Index readings for profit margins and staffing levels increased in September as well. On the other hand, the reading for sales moved modestly lower. All three readings remain above the threshold of 50, which indicated expectations of growth over the next six months.

Adding additional background, ABC Chief Economist Aniban Basu said:

“The construction confidence and backlog metrics appear strong despite the US economy facing headwinds like inflation, financial market volatility, and rapidly rising borrowing costs. Contractors remain decidedly upbeat, with backlog expanding and expectations for rising sales, employment, and profit margins over the next six months.

One would think that the recent surge in interest rates would be enough to dampen contractor confidence. Instead, project owners continue to move forward with a significant number of projects. Faced with high demand for their services, contractor continue to show pricing power, helping to offset rising compensation and other construction delivery costs.”