ABC survey says construction backlog on the rise in 2021

ABC’s Construction Backlog Indicator rose to 7.5 months in January 2021

According to the Associated Builders and Contractors (ABC), its Construction Backlog Indicator rose to 7.5 months in January 2021, which improved slightly on December 2020’s estimate of 7.3 months, but the 7.5-month figure is still a far cry from the pre-pandemic level of January 2021 (8.4 months).

ABC also reported its Construction Confidence Index (CCI) numbers for sales and staffing in January 2021 at 58.4 and 58.1, respectively, which are both higher than the corresponding 56.6 and 56.3 figures in December 2020.

Although both of those 2021 CCI estimates have cleared the association’s threshold of 50, those numbers were in the high-60s in January 2020.

The CCI’s reading on profit margins came in below that 50 threshold and decreased from the 48.6 figure in December 2020.

“Though nonresidential construction spending has continued to recede for the better part of a year, the growing consensus is that the next six months will be a period of improvement,” said ABC Chief Economist Anirban Basu.

Although backlog measures almost a full month (-0.9) below January 2020’s mark and profit margins remain under pressure, Basu said that more than half of contractors expect sales to rise over the next six months and nearly half expect to increase staffing levels.

“The anticipation is that the second half of the year will be spectacular for the U.S. economy from a growth perspective, which will help lift industry fortunes as 2022 approaches,” Basu said.

There are other factors, such as public health and supply chain logistics, to consider. Basu said that the Covid-19 pandemic caused repeated interruptions for many contractors in project work.

Although acquiring materials and equipment has become more difficult and occasional price shocks persist, ABC’s chief economist said that there’s reason to expect growth.

“With vaccinations proceeding apace, many contractors will benefit from fewer interruptions going forward and the restart of many postponed projects,” Basu said.

Read more about CONEXPO-CON/AGG 365’s coverage of materials shortages within the construction industry here.