Backlog in infrastructure projects increased to 7.9 months in November, compared to 6.9 months in October and 6.7 months a year ago, according to Associated Builders and Contractors' Construction Backlog Indicator. The indicator inched up to 8.5 months in November from 8.4 months in October, according to an ABC member survey conducted Nov. 20 to Dec. 4. The reading is down 0.7 months from November 2022.
Backlog decreased on a monthly basis for all categories of company size, with only those with $50-100 million in annual revenue have higher backlog than in November 2022.
“A growing number of contractors are reporting declines in backlog,” said Anirban Basu, chief economist, in a statement. “The interest rate hikes implemented by the Federal Reserve appear to be making more of a mark on the economy. Not only has the cost of capital risen over the past 20+ months, but credit conditions are also tightening, rendering project financing even more challenging."
ABC’s Construction Confidence Index readings for sales and staffing levels increased in November. All three readings remain above the threshold of 50, indicating expectations for growth over the next six months.
“The good news is that certain interest rates have begun to fall in anticipation of Federal Reserve rate cuts next year, perhaps as early as the first quarter,” said Basu. “Still, 2024 is poised to be weaker from a construction demand perspective for many firms, especially those that depend heavily on private developers. Those operating in public construction and/or industrial segments should meet with less resistance on average.”
