Associated Builders and Contractors (ABC) reported its Construction Backlog Indicator held steady at 8.4 months in July, according to an ABC member survey conducted from July 22 to Aug. 6. The reading is down 0.9 months from July 2023.
Only the largest contractors, those with greater than $100 million in annual revenues, have longer backlog than one year ago. Every month, the overall decrease in backlog was driven by declines among the smallest contractors, those with less than $50 million in annual revenue.
ABC’s Construction Confidence Index readings for sales, profit margins, and staffing levels fell in July. All three readings remain above the threshold of 50, indicating expectations for growth over the next six months.
Anirban Basu, chief economist at ABC, says, “Contractor confidence regarding profit margins now stands at the lowest level since November 2022, which comes as little surprise. There are now strong indications that elevated interest rates have finally taken their toll on a number of privately financed construction segments as well as the broader economy.
“While inflation has moderated in recent months, construction materials prices remain almost 40 percent above pre-pandemic levels,” Basu says. “With construction spending down for the past two months, the industry eagerly awaits lower interest rates. Given recent economic turmoil, the Federal Reserve will begin cutting rates at its September meeting.”
Visit ABC’s website to view its Construction Backlog Indicator and Construction Confidence Index tables for July, and full Construction Backlog Indicator and Construction Confidence Index data series.