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WASHINGTON, Dec. 8—Associated Builders and Contractors reported today that its Construction Backlog Indicator declined to 7.2 months in November, a decrease of 0.5 months from October’s reading, according to an ABC member survey conducted from Nov. 20 to Dec. 2. Backlog is 1.7 months lower than in November 2019.
ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels decreased in November. The staffing levels index reading remained above the threshold of 50, indicating expectations of expansion over the next six months. The index reading for sales dipped below 50 in November, while the profit margin index reading remained beneath that threshold, indicating expectations of contraction.
“When the pandemic first struck down the economic expansion during the February-April timeframe, construction emerged as a relative bulwark of stability,” said Basu. “The sector’s essential industry status in most parts of the country, combined with significant pre-existing backlog, allowed much of industry’s activity to persist even as restaurant, retail, hotel, transportation, tourism and other segments suffered massive setbacks. But the protective shields that helped sustain industry performance have begun to weaken.
“Many projects have been postponed, while others have been cancelled,” said Basu. “New bidding opportunities have become rarer, helping to push backlog lower. The prospect of additional lockdowns hasn’t helped, with many investors remaining too uncertain to bring the next generation of commercial projects to market. Lending conditions have tightened. Many segments have been battered financially, including healthcare, certain manufacturing sectors and lodging. A number of contractors also report project delivery interruptions as workers become infected. That has helped to dampen confidence, with contractors collectively indicating expectations for lower sales and profit margins over the next six months. At the same time, the emergence of vaccine candidates provides light at the end of the tunnel, but 2021 is shaping up to be a challenging year for many contractors.”
Note: The reference months for the Construction Backlog Indicator and Construction Confidence Index data series were revised on May 12, 2020, 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.
Click here for historical CCI and CBI data and here for methodology. Visit abc.org/economics for the CBI and CCI reports, plus analysis of spending, employment, GDP and the Producer Price Index.
Associated Builders and Contractors is a national construction industry trade association established in 1950 that represents more than 21,000 members. Founded on the merit shop philosophy, ABC and its 69 chapters help members develop people, win work and deliver that work safely, ethically and profitably for the betterment of the communities in which ABC and its members work. Visit us at abc.org.