Construction backlog declined slightly in September, bringing the number equal to last year at this time, according to a new Associated Builders and Contractors (ABC) report. Yes, despite the slight dip, there seems to be more good news, and a lot of confidence, for growth still to come for the construction industry.
Despite a small dip in September, the South continues to have the lengthiest backlog, as it has since 2021, while the West is the only region to experience increasing backlog over the entire past year.
The ABC Construction Confidence Index for sales and staffing levels increased in September, even as profit margins fell slightly. All three readings remain above the threshold of 50, indicating expectations for growth over the next six months.
“Construction continues to defy the downward gravitational pull of tightening credit conditions,” said ABC Chief Economist Anirban Basu. “Despite high and rising project financing costs, ABC contractor members continue to report lofty backlog, rising employment, expanding sales and stable profit margins.”
The data does show a small divide in resilience between contractors of different sizes. Contractors with more than $100 million in annual revenues increased by 3.2 months from July, while all other smaller revenue brackets saw a marginal decline.
There are some possible warning signs that contractors should watch out for, including increasing interest rates, political disagreements in Washington, labor shortages, and supply chain issues – all of which can affect the industry’s performance and profitability. If the U.S. economy slows, then demand for construction projects may eventually slow as well.
But a recession has been talked about for more than a year now, and yet the construction industry continues moving steadily forward.
“Contractors remain decidedly upbeat, with backlog expanding and expectations for rising sales, employment and profit margins over the next six months,” Basu said.
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