ABC’s Construction Backlog Indicator Down to Start 2023; Contractor Confidence Rises

April 5, 2023

Source- constructionbusinessowner.com,First published February 14, 2023

Associated Builders and Contractors (ABC) reports that its Construction Backlog Indicator declined 0.2 months to 9.0 in January, according to an ABC member survey conducted Jan. 20 to Feb. 3. The reading is 1.0 month higher than in January 2022.

Despite the decline in January, backlog remains elevated by historical standards and is 0.1 months higher than in February 2020, the month before the COVID-19 pandemic began to impact the economy.

ABC’s Construction Confidence Index reading for sales, profit margins and staffing levels increased in January. All three readings remain above the threshold of 50, indicating expectations of growth over the next six months.

“Despite extremely elevated borrowing costs, worker shortages and a generally downcast economic outlook, contractor confidence rebounded in January to a level not seen since the first half of 2022,” said ABC Chief Economist Anirban Basu. “Given the recent employment report, the U.S. economy continues to fend off recession. Some economists have concluded that rather than a hard or soft landing, the U.S. economy is headed for ‘no landing,’ meaning that economic growth will continue despite rising interest rates.

“However, the incredibly strong January jobs report makes it more likely that the Federal Reserve will maintain higher borrowing costs for a longer period,” said Basu. “Eventually, that could cause the economic expansion to unravel, perhaps later this year. That could set the stage for diminished backlog and less confidence for contractors that specialize in privately financed projects as 2024 approaches.”

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