Nonresidential Construction Sector Backlog Indicator Declines Slightly in June

The Associated Builders and Contractors (ABC), a national construction industry trade association, which represents more than 21,000 members, reported on Tuesday (7-12-22) that according to the latest ABC member survey, conducted between June 21 and July 5, its Construction Backlog Indicator fell .01 months in June and now stands at 8.9 months. Year-over-year, the reading is up 0.4 months.

In the same news release, ABC reported its ABC’s Construction Confidence Index readings for sales, profit margins, and staffing levels all declined in June. The indices for sales and staffing remain above the threshold of 50, indicating expectations of growth over the next six months, while the reading for profit margins fell below the threshold of 50 for the first time since October 2021.

In a statement prepared for the June press release, ABC’s Chief Economist Anirban Basu said:

“Several months ago, there was conjecture that contractors were generally too upbeat regarding their collective future. Increasingly, the data suggest that they were. At the time, many contractors reported surging backlog and an ability to pass along hefty cost increases to project owners. For months, contractors expected sales, employment, and margins to expand. The most recent ABC survey indicates that, to secure work and to induce project starts, a growing fraction of contractors is having to trim margins.

While circumstances are hardly catastrophic, the nonresidential construction marketplace is not as strong as it was expected to be. Many factors are involved, including materials prices that have remained stubbornly elevated and construction skills shortages that have refused to dissipate.”