ABC’s Construction Backlog Inches Up in April; Contractor Optimism Slips

Associated Builders and Contractors (ABC) reported that its Construction Backlog Indicator rose to 7.9 months in April, according to an ABC member survey conducted April 20-May 5, 0.1 months higher than in March 2021 and April 2020.

ABC’s Construction Confidence Index readings for sales and profit margins declined modestly in April, while confidence regarding staffing level expectations increased. Only 8.6 percent of respondents expected staffing to decrease. All three indices remain above the threshold of 50, indicating growth expectations over the next six months.

“There was little movement in contractor sentiment in April,” said ABC Chief Economist Anirban Basu. “Collectively, contractors continue to indicate that industry recovery will continue into the summer and beyond. The broader economy is poised to recover rapidly into 2022 as a potent combination of accumulated savings, stimulus, vaccinations and reopening drive consumer outlays and business spending higher. Available data indicate that while many segments, including the office market, continue to exhibit weak fundamentals, the worst is now past in terms of market deterioration.

“There are risks to the outlook, including inflation, rising interest rates and viral variants that may prove more resistant to available vaccines and treatments. Labor and materials shortages may also continue to challenge the industry. Indeed, materials prices have been racing higher recently. A recovering global economy and overwhelmed supply chains may further increase commodity prices during the months ahead, potentially suppressing contractor profit margins.”

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