Associated Builders and Contractors Construction Backlog Indicator Moves Lower in February

On Tuesday, Associated Builders and Contractors (ABC), a group comprised primarily of firms that perform work in the industrial and commercial sector, released its Construction Backlog Indicator (CBI) for February.

According to an ABC survey conducted between February 20th and March 5th, the CBI declined to 8.1 months in February, down from 8.4 months in January. Year-over-year, the measure is down 1.1 months.

According to ABC, the backlog fell for every size of contractor except for those with under $30 million in annual revenues in February. Over the past year, however, the largest contractors—those with greater than $50 million in revenues—have experienced the greatest decline in backlog.

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

Commenting on the results of the February CBI and CCI, ABC Chief Economist Anirban Basu said,

“Backlog is declining and confidence began to fade modestly in February. While it is far too early to predict an industrywide downturn given that confidence readings continue to signal growth along sales, employment, and profit margin dimensions, it appears that a rising tide of project cancellations and postponements has begun to make its mark.

With excess inflation remaining stubbornly durable, at least according to certain measures, interest rates are poised to remain higher for longer. That gives higher borrowing costs more time to upset the economic momentum that has so surprised economists over the past two years and has provided support for various nonresidential construction activities. With so much federal money still entering the economy, there will continue to be support for growth in certain construction segments, including public works and manufacturing-related megaprojects, but industry weakness is more apparent in segments that rely more purely on private financing.”