Backlog in infrastructure projects remained unchanged at 7.9 months in December, compared to 10 months a year ago. The indicator inched up to 8.6 months in December from 8.5 in November, according to an ABC member survey conducted Dec. 20 to Jan. 4. The reading is down 0.6 months from December 2022.
Backlog was up 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.
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“Collectively, contractors experienced an uptick in optimism during the holiday season,” said Anirban Basu, chief economist, in a statement. “Credit conditions eased a bit during the last days of 2023 as the Federal Reserve indicated that its next set of moves will be to reduce borrowing costs. That may have rendered project financing a bit easier, translating into both improved backlog and more optimism regarding sales, employment and profit margins for the for the first half of 2024."
ABC’s Construction Confidence Index readings for sales, profit margins, and staffing levels increased in December. All three readings remain above the threshold of 50, indicating expectations for growth over the next six months.
“Still, there remains cause for concern,” said Basu. “Recent data indicate that wage pressures persist, which makes it more likely that interest rates, and therefore project financing costs, will remain higher for longer. Geopolitical instability appears to be on the rise, raising the probability of a major conflagration that could further impact supply chains and potentially cause steep increases in certain energy prices.”
