Contractor Confidence Declines in August as Construction Backlog Indicator Tumbles Lower

The Associated Builders and Contractors (ABC) reported on Tuesday (9-14-21) that is Construction Backlog Indicator, the results of an ABC member survey, declined significantly to a reading of 7.7 months in August. The reading is down -0.8 months month-over-month (July vs. August) and down 0.3 months year-over-year (August 2020 vs. August 2021).

In commenting on the survey and its decline, Anirban Basu, ABC Chief Economist said, “Both contractor backlog and confidence have begun to fade. Higher materials prices and labor costs have conspired to put more projects on hold. In many instances, expanding costs have rendered projects infeasible.” Basu added, “That said, it is still the case that contractors collectively anticipate sales, staffing levels, and margins to rise over the next six months. The expected pace of improvement has softened, however. With so much liquidity continuing to be injected into financial systems, investors have considerable sums to deploy in new investments. Real estate valuations and construction volumes benefit from such dynamics. Recent dips in commodity prices and more normal labor market functioning should help translate into slower cost escalations and rebounding backlog during the months ahead, ultimately reversing the backlog decline sustained in August.”