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 | Feb 15, 2018
United States ranks fourth for renter growth
Renters are on the rise in 21 of the 30 countries examined in RentCafé’s recent study.
Market Data | Feb 1, 2018
Nonresidential construction spending expanded 0.8% in December, brighter days ahead
“The tax cut will further bolster liquidity and confidence, which will ultimately translate into more construction starts and spending,” said ABC Chief Economist Anirban Basu.
Green | Jan 31, 2018
U.S. Green Building Council releases annual top 10 states for LEED green building per capita
Massachusetts tops the list for the second year; New York, Hawaii and Illinois showcase leadership in geographically diverse locations.
Industry Research | Jan 30, 2018
AIA’s Kermit Baker: Five signs of an impending upturn in construction spending
Tax reform implications and rebuilding from natural disasters are among the reasons AIA’s Chief Economist is optimistic for 2018 and 2019.
Market Data | Jan 30, 2018
AIA Consensus Forecast: 4.0% growth for nonresidential construction spending in 2018
The commercial office and retail sectors will lead the way in 2018, with a strong bounce back for education and healthcare.
Market Data | Jan 29, 2018
Year-end data show economy expanded in 2017; Fixed investment surged in fourth quarter
The economy expanded at an annual rate of 2.6% during the fourth quarter of 2017.
Market Data | Jan 25, 2018
Renters are the majority in 42 U.S. cities
Over the past 10 years, the number of renters has increased by 23 million.
Market Data | Jan 24, 2018
HomeUnion names the most and least affordable rental housing markets
Chicago tops the list as the most affordable U.S. metro, while Oakland, Calif., is the most expensive rental market.
Market Data | Jan 12, 2018
Construction input prices inch down in December, Up YOY despite low inflation
Energy prices have been more volatile lately.
Market Data | Jan 4, 2018
Nonresidential construction spending ticks higher in November, down year-over-year
Despite the month-over-month expansion, nonresidential spending fell 1.3 percent from November 2016.