WEDNESDAY, AUGUST 23, 2023
Last week, the Associated Builders and Contractors reported its Construction Backlog Indicator numbers, revealing an increase to 9.3 months in July. According to the member survey conducted from July 20 to Aug. 4, the reading is also up by 0.6 months since this time last year.
“Nonresidential construction backlog continues to expand, which is precisely what contractors had predicted six months ago,” said ABC Chief Economist Anirban Basu. “For many months, contractors have been signaling an expectation that demand for their services would continue to expand despite high and rising interest rates and a spate of regional bank failures”
Additionally, the ABC adds that the South remains the region with the highest level of backlog, despite being the only region with lower backlog on a year-ago basis. Backlog gains in July were concentrated in the commercial and institutional category.
Sectors experiencing an increase in backlog included:
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Last week, the Associated Builders and Contractors reported its Construction Backlog Indicator numbers, revealing an increase to 9.3 months in July. |
However, the backlog also witnessed decreases in several sectors, including:
“That said, there are some surprises in the data,” said Basu. “Backlog declined in both the infrastructure and heavy industry categories, possibly because the current administration is striving to reserve many large-scale projects for unionized firms.
“ABC members are largely nonunion, and therefore may be locked out of a meaningful proportion of significant opportunities. Diminished competition for such projects would tend to drive up construction service delivery charges, much of which are financed by American taxpayers.”
The ABC’s Construction Confidence Index reading for profit margins and staffing levels also reportedly moved higher in July, while the reading for sales fell slightly. All three readings remain above the threshold of 50, indicating expectations of growth over the next six months.
July Material Prices
Construction input prices were unchanged in July compared to the previous month, according to a recent ABC analysis of U.S. Bureau of Labor Statistics Producer Price Index data. Nonresidential construction input prices reportedly fell 0.1% for the month.
Overall, construction input prices are 3.1% lower than a year ago, while nonresidential construction input prices are 2.7% lower, ABC explains.
However, prices have increased in all three energy subcategories. Natural gas prices were up 11.0%, while crude petroleum and unprocessed energy materials prices increased 8.4% and 8.0%, respectively.
The Associated General Contractors of America analysis found that while contractors are finally seeing some relief from recent supply chain problems and price escalations, the competitive market means key materials are still very hard to find.
According to the AGC release, the impacts from the pandemic and Russia’s attack on Ukraine have slowed, but long lead times reportedly remain for electrical equipment and construction machinery. Cement, lumber, plywood and asphalt coatings are some of the materials showing “persistent” price increases.
The analysis also reportedly found that contractors’ bid prices fell by 1.4% last month. That said, officials continue to express concerns over the new Buy America requirements of the bipartisan infrastructure law.
June Backlog, Confidence Report
Last month, the ABC released its numbers for the month of June, reporting that the CBI remained unchanged at 8.9 months. According to the latest ABC survey, which was conducted from June 20 to July 5, the reading is also unchanged from June 2022.
The ABC added that backlog in the infrastructure category increased for the third straight month and is now at the highest level in nearly two years. On a regional basis, the South remains the region with the highest backlog, despite being the only region in which backlog declined in June.
However, while the CCI reading for sales, profit margins and staffing levels moved lower in June, all three readings remain above the threshold of 50. This indicates expectations of growth over the next six months.
Tagged categories: Associated Builders and Contractors; Associated Builders and Contractors Inc. (ABC); Contractors; Contracts; Economy; Good Technical Practice; Market; Market data; Market forecasts; Market research; Market trends; Program/Project Management; Projects - Commercial
