Associated Builders and Contractors reports today that its Construction Backlog Indicator rose to 8.0 months in May, according to an ABC member survey conducted from May 20 to June 2, 0.1 months higher than in April 2021 and May 2020.
While ABC’s Construction Confidence Index readings for sales increased modestly in May, confidence regarding profit margins and staffing levels slipped. All three indices remain above the threshold of 50, indicating expectations of growth over the next six months.
“Nonresidential construction backlog continues to edge higher, consistent with expectations that sales, profit margins and staffing will expand over the next six months,” said ABC chief economist Anirban Basu. “For at least four reasons, this represents an extraordinary set of findings.
“First, materials prices have risen significantly over the past year and labor costs are also on the rise,” said Basu. “All things equal, one might think this would suppress profit margin growth. Apparently, demand for construction services is strong enough to generate sufficient pricing power to more than fully countervail those factors. Second, skills shortages continue to impact the construction industry and many other segments. Despite that, the average nonresidential contractor expects to expand their teams during the months ahead.
“Third, conventional wisdom suggests that commercial real estate fundamentals are weak in the context of remote working, online shopping and sluggish business travel,” said Basu. “Nonetheless, backlog in the commercial category remains stable. Fourth and finally, while there has been much talk about a federal infrastructure plan, it remains elusive. Nonetheless, backlog in the infrastructure category rose significantly in May, perhaps a reflection of stronger state and local government balance sheets and associated increases in infrastructure outlays. In sum, contractors can expect healthy growth in activity through the balance of 2021.”
Related Stories
Multifamily Housing | Aug 12, 2016
Apartment completions in largest metros on pace to increase by 50% in 2016
Texas is leading this multifamily construction boom, according to latest RENTCafé estimates.
Market Data | Jul 29, 2016
ABC: Output expands, but nonresidential fixed investment falters
Nonresidential fixed investment fell for a third consecutive quarter, as indicated by Bureau of Economic Analysis data.
Industry Research | Jul 26, 2016
AIA consensus forecast sees construction spending on rise through next year
But several factors could make the industry downshift.
Architects | Jul 20, 2016
AIA: Architecture Billings Index remains on solid footing
The June ABI score was down from May, but the figure was positive for the fifth consecutive month.
Market Data | Jul 7, 2016
Airbnb alleged to worsen housing crunch in New York City
Allegedly removing thousands of housing units from market, driving up rents.
Market Data | Jul 6, 2016
Construction spending falls 0.8% from April to May
The private and public sectors have a combined estimated seasonally adjusted annual rate of $1.14 trillion.
Market Data | Jul 6, 2016
A thriving economy and influx of businesses spur construction in downtown Seattle
Development investment is twice what it was five years ago.
Multifamily Housing | Jul 5, 2016
Apartments continue to shrink, rents continue to rise
Latest survey by RENTCafé tracks size changes in 95 metros.
Multifamily Housing | Jun 22, 2016
Can multifamily construction keep up with projected demand?
The Joint Center for Housing Studies’ latest disection of America’s housing market finds moderate- and low-priced rentals in short supply.
Contractors | Jun 21, 2016
Bigness counts when it comes to construction backlogs
Large companies that can attract talent are better able to commit to more work, according to a national trade group for builders and contractors.