The Associated Builders and Contractors (ABC), a group comprised primarily of firms that perform work in the industrial and commercial sector, on Tuesday (1-16-24) released its Construction Backlog Indicator (CBI) for December. According to a survey conducted between December 20th, 2023, and January 4th, 2024, the CBI increased to 8.6 months in December, up from 8.5 months in November. Year-over-year, the measure is down 0.6 months.
The South continues to have the lengthiest backlog and posted the largest monthly increase in December. On the other hand, the West, which typically has the shortest backlog of any region, posted a monthly decline.
Commenting on the results of the December CBI, ABC Chief Economist Anirban Basu said,
“Collectively, contractors experienced an uptick in optimism during the holiday season. Credit conditions eased a bit during the last days of 2023 as the Federal Reserve indicated that its next set of moves will be to reduce borrowing costs. That may have rendered project financing a bit easier, translating into both improved backlog and more optimism regarding sales, employment, and profit margins for the for the first half of 2024.
“Still, there remains cause for concern. Recent data indicate that wage pressures persist, which makes it more likely that interest rates, and therefore project financing costs, will remain higher for longer. Geopolitical instability appears to be on the rise, raising the probability of a major conflagration that could further impact supply chains and potentially cause steep increases in certain energy prices.”
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