Associated Builders & Contractors’ (ABC) Construction Backlog Indicator, an economic indicator that reflects the amount of work that will be performed by commercial and industrial construction contractors in the months ahead, declined in January to eight months, according to an ABC member survey.
The reading is down 0.2 months from December 2021, but up 0.5 months from January 2021.
ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels all inched lower in January. All three indexes remain above the threshold of 50, indicating expectations of growth over the next six months.
“Despite the omicron variant, ongoing supply chain issues, elevated energy and materials prices and rampant staffing shortages, the average nonresidential contractor remains upbeat,” says Anirban Basu, ABC’s chief economist. “Perhaps the most remarkable aspect of the survey findings is the expectation that industry profit margins will expand during coming months, implying that contractors expect to pass along enough price increases to project owners to countervail the rising costs of construction service delivery.
Basu adds that while the last two months indicated a declining backlog, he says the dips are not cause for particular concern.
“Declining backlog indicates that some projects are postponed or canceled in response to rising costs and/or extended delivery timelines,” Basu says. “The principal challenge for contractors remains a lack of sufficiently skilled labor, a structural issue that will not go away soon and a circumstance contractors have dealt with for years. The situation is likely to deteriorate further as federal infrastructure dollars begin affecting the economy more forcefully in the near future.”