Infrastructure fuels backlog: ABC

Infrastructure projects are responsible for a bump in construction backlogs, according to the Associated Builders and Contractors. Its Construction Backlog Indicator increased to 8.9 months in April from 8.7 in March, which is 0.1 months higher than in April 2022.

The bounce followed the seven-month low recorded in March. Regionally, backlog increased in the Northeast and West but fell in the South and middle states.

“Based on ABC member sentiment, one would not be able to discern that interest rates are high, the nation’s banking sector is in tumult, politicians are arguing over the nation’s debt limit, and recession fears remain pervasive,” said Anirban Basu, chief economist, in a statement. “Despite many headwinds and an active news cycle, contractors continue to express confidence in the near term.

“Still, there is some evidence of a shift,” said Basu. “With credit conditions tightening, expectations are that private construction is poised for weaker times ahead. Nonetheless, backlog expanded in April, as infrastructure contractors began to take on more public works projects. Moreover, despite rapidly rising compensation costs, more ABC contractors expect profit margins to expand as opposed to recede over the next six months, evidence of sufficiently strong demand for construction services to support pricing power.”

Source: ABC

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