Nonresidential Construction Backlog Declines to Its Lowest Level Since August 2022

The Associated Builders and Contractors reported on Tuesday (4-11-23) that its Construction Backlog Indicator declined to 8.7 months in March. However, the reading is 0.4 months higher than a year ago. The most recent indicator is based on an ABC member survey conducted between March 20th and April 3rd. ABC is a national, nonresidential construction industry trade association representing more than 22,000 members.

With backlogs declining in March, the indicator is now at its lowest level since August 2022. The backlog was down on a monthly basis in every region except for the South, which continues to be associated with elevated levels of current and future construction activity.

Adding additional background and his analysis to the ABC Construction Backlog Indicator report, ABC’s Chief Economist Dr. Anirban Basu said:

“The deceleration in nonresidential construction activity may have started. With widespread fears of recession, credit conditions tightening, and more decision makers turning their attention to cost containment, new construction work may be more difficult for contractors to line up.

While the confidence and backlog data weakened in March, they indicate a slowing of activity rather than a shift into reverse. There is a widely held view that financial conditions are tightening in the aftermath of the failures of Silicon Valley Bank and Signature Bank. To the extent that this is true, one could anticipate further slowing and less industry confidence during the months ahead.”