Associated Builders and Contractors Reports Construction Backlog Indicator Increased to 8.5 Months in June

Associated Builders and Contractors (ABC) reported on Tuesday (7-13-21) that according to its latest ABC member survey conducted between June 20 and July 6, 2021, its Construction Backlog Indicator (CBI) rose to 8.5 months for June. The latest report is 0.5 months higher than the May 2021 report and 0.4 months higher than in June 2020. ABC’s Construction Confidence Index readings for sales, profit margins, and staffing levels increased modestly in June. All three indices remain above the threshold of 50, indicating expectations of growth over the next six months.

In commenting on the survey’s results, ABC Chief Economist Anirban Basu said, “Nonresidential contractors continue to predict a strong rebound in activity over the balance of the year. Despite recent weakness in industry employment and spending data, contractors collectively remain upbeat. The neck-snapping pace of economic recovery, along with low financing costs and the return of projects that had been placed on the back burner during the pandemic, is translating into rising backlog and optimistic perspectives on employment, sales and profit margins.” Basu went onto say that rapidly rising materials prices were one of the leading threats to a vigorous nonresidential construction recovery; however, that factor has become a bit less concerning in recent weeks. “Still, materials prices are likely to remain meaningfully above pre-pandemic levels. Moreover, the shortage of skilled workers continues to worsen, driving up wages and project bids in the process. Demand for construction services is expected to be strong enough during the months ahead to allow contractors to pass many of these higher costs onto the purchasers of construction services, preserving margins in the process.”