Contractor Optimism Improves as ABC’s Construction Backlog Inches Up in December

WASHINGTON, Jan.12—Associated Builders and Contractors reported today that its Construction Backlog Indicator rebounded modestly to 7.3 months in December, an increase of 0.1 months from November’s reading, according to an ABC member survey conducted from Dec. 18 to Jan. 5. Backlog is 1.5 months lower than in December 2019.

Construction Backlog Indicator

	Dec. 2020	Nov. 2020	Dec. 2019	1-Month Net Change	12-Month Net Change
Total	7.3	7.2	8.8	0.1	-1.5
*Industry*
Commercial & Institutional	7.3	7.2	8.9	0.1	-1.6
Heavy Industrial	4.2	4.5	7.1	-0.3	-2.9
Infrastructure	8.9	8.7	9.6	0.2	-0.7
*Region*
Middle States	6.2	6.0	7.5	0.2	-1.3
Northeast	7.9	7.1	8.5	0.8	-0.6
South	8.3	8.4	10.2	-0.1	-1.9
West	6.7	7.8	8.8	-1.1	-2.1
*Company Size*
less than $30 Million	7.0	6.8	8.1	0.2	-1.1
$30-$50 Million	7.2	7.5	8.3	-0.3	-1.1
$50-$100 Million	8.5	8.2	9.8	0.3	-1.3
more than $100 Million	10.0	10.4	13.0	-0.4	-3.0

©Associated Builders and Contractors, Construction Backlog Indicator

ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels increased in December. The sales index climbed above the threshold of 50, indicating contractors expect to grow sales over the next six months. The index reading for profit margins remained below that threshold. The staffing level index increased to 56.3 but remains well below its December 2019 reading.

Construction Confidence Index

Response	December 2020	November 2020	December 2019
	*CCI Reading*
Sales	56.6	49.4	69.5
Profit Margins	48.6	43.4	61.3
Staffing	56.3	53.8	66.9

	*Sales Expectations*
Up Big	5.6%	5.4%	14.5%
Up Small	47.5%	36.5%	60.5%
No Change	21.7%	22.1%	14.8%
Down Small	18.2%	22.5%	8.9%
Down Big	7.1%	13.5%	1.3%
	*Profit Margins Expectations*
Up Big	5.1%	2.7%	4.9%
Up Small	24.7%	22.1%	47.7%
No Change	35.4%	32.0%	35.5%
Down Small	29.3%	32.4%	11.2%
Down Big	5.6%	10.8%	0.7%
	*Staffing Level Expectations*
Up Big	2.5%	2.7%	7.9%
Up Small	39.9%	35.1%	56.9%
No Change	40.4%	43.7%	30.6%
Down Small	14.6%	11.7%	3.9%
Down Big	2.5%	6.8%	0.7%

©Associated Builders and Contractors, Construction Confidence Index

“While many contractors enter 2021 with significant trepidation, the most recent backlog and confidence readings suggest that the onset of vaccinations has generally led to more upbeat assessments regarding nonresidential construction’s future,” said ABC Chief Economist Anirban Basu. “Backlog is down substantially from its year-ago level and profit margins remain under pressure, yet many contractors expect to enjoy higher sales and to support more staff six months from now.

“The baseline expectation is that by the spring, the U.S. economy will blossom,” said Basu. “With many households sitting on mounds of savings and sustaining pent-up demand for many goods and services, the U.S. economy is set for rapid growth as it reopens more fully during mid to late 2021. While it will take time for that to fully translate into new construction projects, some that were postponed earlier during the pandemic are likely to come back to life over the next several months. That should help many contractors begin to rebuild backlog, and to eagerly await 2022.”

Note: The reference months for the Construction Backlog Indicator and Construction Confidence Index data series were revised on May 12 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.

Click here for historical CCI and CBI data and here for methodology. Visit abc.org/economics for the CBI and CCI reports, plus analysis of spending, employment, GDP and the Producer Price Index.

Associated Builders and Contractors is a national construction industry trade association established in 1950 that represents more than 21,000 members. Founded on the merit shop philosophy, ABC and its 69 chapters help members develop people, win work and deliver that work safely, ethically and profitably for the betterment of the communities in which ABC and its members work. Visit us at abc.org.