Associated Builders and Contractors Construction Backlog Indicator Trends Lower in January

On Tuesday, the 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 January. According to a survey conducted between January 22nd and February 4th, the CBI declined to 8.4 months, down from 8.6 months in December. Year-over-year, the measure is down 0.6 months.

The heavy industrial category increased to 10.0 months, the highest reading on record for the category and 2.5 months higher than January 2023. On the other hand, the backlog in the commercial/institutional and infrastructure categories are down year-over-year.

ABC’s Construction Confidence Index (CCI) readings for sales and staffing levels increased in January, while the reading for profit margins declined. 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:

“As predicted, performance in the nonresidential construction sector is becoming more disparate across segments. For much of the pandemic recovery period, contractors in virtually all segments were indicating stable to rising backlog. That remains the case for contractors most exposed to the nation’s industrial production. Reshoring and near-shoring continue to drive construction spending.

In other categories, however, including those most interest rate-sensitive, activity appears to be slowing. Developer financing has become both more expensive and more difficult to obtain over roughly the past year, in part because of rising office vacancy in many markets. That helps to explain declining backlog in the commercial category. The decline in infrastructure-related backlog may be due only to seasonality, however. There is every reason to believe that contractors specializing in public works will have a very busy year.”