ABC’s Construction Backlog Indicator Steady in June, but Contractor Confidence Is Down

Associated Builders and Contractors recently reported that its Construction Backlog Indicator remained unchanged at 8.9 months in June, according to an ABC member survey conducted June 20 to July 5. The reading is unchanged from June 2022. View the historic Construction Backlog Indicator and Construction Confidence Index data series.

Backlog in the infrastructure category increased for the third straight month and is now at the highest level in nearly two years. On a regional basis, the South remains the region with the highest backlog, despite being the only region in which backlog declined in June.

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

“Backlog once again remained stable in June despite tight credit conditions and high interest rates,” said ABC Chief Economist Anirban Basu. “While those risk factors drove a decline in all three Construction Confidence Index series, contractors continue to signal an expectation that sales, profit margins and staffing will expand over the second half of 2023.

“Many aspects of the economy, including consumer spending and the labor market, held up better than expected in the second quarter,” said Basu. “That bodes well for economic growth over the summer, but also suggests that the Federal Reserve may raise rates higher and keep them there longer in their ongoing efforts to suppress inflation. All else equal, that will reduce construction activity in the quarters to come.”

Note: The reference months for the Construction Backlog Indicator and Construction Confidence Index data series were revised on May 12, 2020, to better reflect the survey period. CBI quantifies the previous month’s work under contract based on the latest financials available, while CCI measures contractors’ outlook for the next six months.

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