Associated Builders and Contractors (ABC) reports that its Construction Backlog Indicator rose to 8.5 months in June, according to an ABC member survey conducted June 20 to July 6, 0.5 months higher than in May 2021 and 0.4 months higher than in June 2020.
“Nonresidential contractors continue to predict a strong rebound in activity over the balance of the year,” said ABC Chief Economist Anirban Basu. “Despite recent weakness in industry employment and spending data, contractors collectively remain upbeat. The neck-snapping pace of economic recovery, along with low financing costs and the return of projects that had been placed on the back burner during the pandemic, is translating into rising backlog and optimistic perspectives on employment, sales and profit margins.
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ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels increased modestly in June. All three indices remain above the threshold of 50, indicating expectations of growth over the next six months.
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“Rapidly rising materials prices was one of the leading threats to a vigorous nonresidential construction recovery; however, that factor has become a bit less concerning in recent weeks,” Basu said. “Still, materials prices are likely to remain meaningfully above pre-pandemic levels. Moreover, the shortage of skilled workers continues to worsen, driving up wages and project bids in the process. Demand for construction services is expected to be strong enough during the months ahead to allow contractors to pass many of these higher costs onto the purchasers of construction services, preserving margins in the process.”
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Visit abc.org/economics for the Construction Backlog Indicator and Construction Confidence Index, 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.
