Despite Flat Backlogs, Nonresidential Contractors Remain Optimistic, ABC Says

Contractors are feeling optimistic heading into the fourth quarter of 2022, according to the Associated Builders and Contractors Construction Confidence Index (CCI) and Construction Backlog Indicator (CBI).

The CBI quantifies the previous month’s work under contract but not yet completed by nonresidential contractors, according to ABC.

The indicator remained unchanged at 8.7 months in August, though it is still up a full month higher than the same time last year. While backlog is down from second quarter of 2022, it remains higher than at any point from March 2021 to March 2022.

According to the report, backlog rose in August in the West but slipped in the middle states, Northeast and the South. Despite the slip, the South still shows the lengthiest backlog at 10.9 months

Associated Builders and ContractorsABC’s Construction Confidence Index readings for sales, profit margins and staffing levels increased in August. The CCI measures contractors’ outlook for the next six months. The index for profit margins bounced back into positive territory at 51.9, while the sales and staffing level indices remained above 50, indicating expectations of growth.

Associated Builders and Contractors“Despite the high risk of recession, contractors collectively expect sales, employment and profit margins to grow over the next six months,” said ABC Chief Economist Anirban Basu. “Backlog is down from the cyclical peak in early 2022 and has been roughly flat in recent months."

“The buoyancy of the nation’s nonresidential construction marketplace is really quite remarkable,” Basu adds. “Rising interest rates have already driven the single-family homebuilding market into recession, but brisk nonresidential activity continues. Many nonresidential contractors are operating at capacity, and their principal frustrations relate to supply-side issues like worker shortages, equipment delivery delays and elevated materials prices, as opposed to demand for their services.”

Associated Builders and Contractors