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
Market Data | Sep 19, 2018
August architecture firm billings rebound as building investment spurt continues
Southern region, multifamily residential sector lead growth.
Market Data | Sep 18, 2018
Altus Group report reveals shifts in trade policy, technology, and financing are disrupting global real estate development industry
International trade uncertainty, widespread construction skills shortage creating perfect storm for escalating project costs; property development leaders split on potential impact of emerging technologies.
Market Data | Sep 17, 2018
ABC’s Construction Backlog Indicator hits a new high in second quarter of 2018
Backlog is up 12.2% from the first quarter and 14% compared to the same time last year.
Market Data | Sep 12, 2018
Construction material prices fall in August
Softwood lumber prices plummeted 9.6% in August yet are up 5% on a yearly basis (down from a 19.5% increase year-over-year in July).
Market Data | Sep 7, 2018
Safety risks in commercial construction industry exacerbated by workforce shortages
The report revealed 88% of contractors expect to feel at least a moderate impact from the workforce shortages in the next three years.
Market Data | Sep 5, 2018
Public nonresidential construction up in July
Private nonresidential spending fell 1% in July, while public nonresidential spending expanded 0.7%.
Market Data | Aug 30, 2018
Construction in ASEAN region to grow by over 6% annually over next five years
Although there are disparities in the pace of growth in construction output among the ASEAN member states, the region’s construction industry as a whole will grow by 6.1% on an annual average basis in the next five years.
Market Data | Aug 22, 2018
July architecture firm billings remain positive despite growth slowing
Architecture firms located in the South remain especially strong.
Market Data | Aug 15, 2018
National asking rents for office space rise again
The rise in rental rates marks the 21st consecutive quarterly increase.