Construction Backlog Indicator rose to 7.9 months in May, an increase of less than 0.1 months from April’s reading. Furthermore, based on an ABC member survey conducted May 20-June 3, results indicate that confidence among U.S. construction industry leaders continued to rebound from the historically low levels observed in the March survey.
Nonresidential construction backlog is down 0.8 months compared to May 2019 and declined year over year in every industry, classification and region. Backlog in the heavy industrial category, however, increased by nearly one month in May after reaching its lowest level in the history of the series in April.
ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels expectations all increased in May, although sales and profit margin expectations remain below the threshold of 50, indicating ongoing anticipation of contraction. The staffing level index remained above that threshold, with more than 38% of contractors expecting to expand their staff during the next six months.
More than 45% of contractors expect their sales to decline during the next six months while 35% expect sales to increase. More than 48% of contractors expect their profit margins to decrease over the next two quarters.
- The CCI for sales expectations increased from 41.1 to 44.9 in May.
- The CCI for profit margin expectations increased from 39.8 to 41.7.
- The CCI for staffing levels increased from 51.4 to 53.
“Given the depth of the economic downturn and myriad other issues facing America today, backlog and contractor confidence data have held up better than one might have anticipated,” said ABC Chief Economist Anirban Basu. “But the marketplace is still tilted toward pessimism. For instance, more contractors expect sales and profit margins to decline than increase over the next six months, which is consistent with anecdotal information suggesting that many project owners are considering postponing projects and possibly rebidding them.
“After falling meaningfully in April, backlog remained relatively unchanged in May, hinting at a stable nonresidential construction marketplace,” said Basu. “However, the underlying survey received fewer responses compared to earlier months in the COVID-19 crisis, perhaps suggesting that some contractors are no longer operating at previous capacity, inducing available work to move toward better-positioned contractors. To the extent that these stronger contractors are reflected in the survey, this would tend to bolster average backlog even in the context of a subdued marketplace.
“Contractors still expect to boost staffing levels over the next six months,” said Basu. “But this may simply be a function of jobsites reopening as construction shutdowns end. Almost 70% of respondents had jobsites shut down due to government mandates and other reasons, and with labor shortages in place before the pandemic, contractors may have residual staffing needs. It remains to be seen whether expected employment growth going forward coincides with speedy recovery in overall contractor confidence and backlog.”
Note: The reference months for the Construction Backlog Indicator and Construction Confidence Index data series were revised on May 12 to better reflect the survey period. CBI quantifies the previous month’s work under contract based on the latest financials available, while CCI measures contractors’ outlook for the next six months.
Related Stories
Market Data | Feb 16, 2017
How does your hospital stack up? Grumman/Butkus Associates 2016 Hospital Benchmarking Survey
Report examines electricity, fossil fuel, water/sewer, and carbon footprint.
Market Data | Feb 1, 2017
Nonresidential spending falters slightly to end 2016
Nonresidential spending decreased from $713.1 billion in November to $708.2 billion in December.
Market Data | Jan 31, 2017
AIA foresees nonres building spending increasing, but at a slower pace than in 2016
Expects another double-digit growth year for office construction, but a more modest uptick for health-related building.
High-rise Construction | Jan 23, 2017
Growth spurt: A record-breaking 128 buildings of 200 meters or taller were completed in 2016
This marks the third consecutive record-breaking year for building completions over 200 meters.
Market Data | Jan 18, 2017
Fraud and risk incidents on the rise for construction, engineering, and infrastructure businesses
Seven of the 10 executives in the sector surveyed in the report said their company fell victim to fraud in the past year.
Market Data | Jan 18, 2017
Architecture Billings Index ends year on positive note
Architecture firms close 2016 with the strongest performance of the year.
Market Data | Jan 12, 2017
73% of construction firms plan to expand their payrolls in 2017
However, many firms remain worried about the availability of qualified workers.
Market Data | Jan 9, 2017
Trump market impact prompts surge in optimism for U.S. engineering firm leaders
The boost in firm leader optimism extends across almost the entire engineering marketplace.
Market Data | Jan 5, 2017
Nonresidential spending thrives in strong November spending report
Many construction firms have reported that they remain busy but have become concerned that work could dry up in certain markets in 2017 or 2018, says Anirban Basu, ABC Chief Economist.
Market Data | Dec 21, 2016
Architecture Billings Index up slightly in November
New design contracts also return to positive levels, signifying future growth in construction activity.