Associated Builders and Contractors Construction Backlog Indicator Declines in May

Associated Builders and Contractors (ABC), a national construction industry trade association representing more than 23,000 members, reported (6-11-24) that its Construction Backlog Indicator declined to 8.3 months in May. Year-over-year, the indicator is down 0.6 months. The measure is based on an ABC member survey conducted between May 20th and June 4th.

According to ABC, the backlog declined on a monthly basis for every company size except those contractors with greater than $100 million in annual revenues. On an annual basis, the backlog is down for contractors of all sizes.

ABC’s Construction Confidence Index (CCI), a reading for profit margins and staffing levels, declined slightly in May, while the reading for sales improved. All three readings remain above the threshold of 50, indicating expectations for growth over the next six months.

In remarks accompanying the report, ABC Chief Economist Anirban Basu said:

“Over a year has passed since the Federal Reserve raised the target range of the federal funds rate above 5%. Despite widespread expectations that rates will remain elevated through at least the end of the year, contractors remain confident about the future, with a majority of contractors expecting their sales and staffing levels to expand over the next six months.

Although backlog has been lower in 2024 than it was during 2023, it has also been stable. While significant spending activity in manufacturing and infrastructure-related segments has kept contractors busy, input cost escalation has reemerged in recent months. As a result, contractor confidence regarding profit margins has fallen to the lowest level since November 2023.”