The Associated Builders and Contractors Construction Backlog Indicator Rises Sharply in February

A survey of Associated Builders and Contractors (ABC) members conducted between February 22 and March 3, 2021 reports that the ABC Construction Backlog Indicator rose to 8.2 months in February. This is an increase of 0.7 months from the January 2021 survey. However, year-over-year (February 2020 vs. February 2021) it is -0.7 months lower. ABC’s Construction Confidence Index readings for sales, profit margins, and staffing levels also increased in February. All three indices are now above the threshold of 50, indicating expectations of growth during the next six months, but below February 2020 levels. In remarks prepared for the release of the survey, ABC Chief Economist Anirban Basu, said, “The expectation that rapid economic recovery could begin later this year has now swept through the nonresidential construction sector, which is surprising, as I anticipated this segment would be less upbeat. After all, commercial real estate fundamentals have been compromised by behavioral and policy shifts motivated by the COVID-19 pandemic. Public finances have also been affected negatively, which could diminish demand for construction services going forward. Rapidly rising materials prices are also creating concern, as they would have a tendency to further squeeze industry profit margins. Despite these factors, contractors now expect sales, staffing levels and profit margins to expand over the next six months. Backlog has been edging higher for several months and rose sharply last month as projects that had been mothballed are coming back to life.”