Construction backlog increases to 7.9 months in April
By Riley SimpsonMay 17, 2021
Associated Builders and Contractors (ABC) reported an increase in its Construction Backlog Indicator to 7.9 months in April, according to a member survey ABC conducted from April 20 to May 5.
The figure is 0.1 months higher than in March 2021 and April 2020, the latter of which was the first full month of the Covid-19 pandemic in the U.S., although the backlog was highest (at 8.2 months) in February 2021.
Standing out are the construction industries of Infrastructure (7.9 months of backlog) and Commercial & Institutional (8.0), which boast backlogs at or higher than the 7.9 benchmark for April.
ABC also split up the backlog data into regions, with the West and South markets in the U.S. leading the pack with backlog numbers of 8.8 and 8.2, respectively; the Northeast is in line with the total April figure of 7.9, and the Middle States are behind at 6.9 months.
ABC also released readings from its Construction Confidence Index (CCI), which showed that sales and profit margins declined modestly in April while confidence regarding staffing level expectations increased.
“There was little movement in contractor sentiment in April,” said ABC Chief Economist Dr. Anirban Basu. “Collectively, contractors continue to indicate that industry recovery will continue into the summer and beyond. The broader economy is poised to recover rapidly into 2022 as a potent combination of accumulated savings, stimulus, vaccinations and reopening drive consumer outlays and business spending higher. Available data indicate that while many segments, including the office market, continue to exhibit weak fundamentals, the worst is now past in terms of market deterioration.”
According to ABC’s CCI, only 8.6% of respondents expected staffing to decrease. Overall, all three indices remain above the threshold of 50, ABC said in its statement, which indicates growth expectations over the next six months.
“There are risks to the outlook, including inflation, rising interest rates and viral variants that may prove more resistant to available vaccines and treatments,” Basu said. “Labor and materials shortages may also continue to challenge the industry. Indeed, materials prices have been racing higher recently. A recovering global economy and overwhelmed supply chains may further increase commodity prices during the months ahead, potentially suppressing contractor profit margins.”