Will construction cool off this summer?

The construction backlog for American contractors has declined to an average of 8.7 months in March, the lowest level since August 2022, suggesting it might be more difficult for contractors to line up work this summer.

This is according to Associated Builders and Contractors (ABC), which released its Construction Backlog Indicator based on a member survey conducted March 20 to April 3. The reading is 0.4 months higher than in March 2022.

View the historic Construction Backlog Indicator and Construction Confidence Index data series.

Backlog is down on a monthly basis in every region except for the South, which continues to be associated with elevated levels of current and future construction activity.

Meanwhile, ABC’s Construction Confidence Index reading for sales inched higher in March, while the readings for profit margins and staffing levels fell. 

“The deceleration in nonresidential construction activity may have started,” said ABC Chief Economist Anirban Basu. “With widespread fears of recession, credit conditions tightening and more decision-makers turning their attention to cost containment, new construction work may be more difficult for contractors to line up.”

He continued, “While the confidence and backlog data weakened in March, they indicate a slowing of activity rather than a shift into reverse,” said Basu. “There is a widely held view that financial conditions are tightening in the aftermath of the failures of Silicon Valley Bank and Signature Bank. To the extent that this is true, one could anticipate further slowing and less industry confidence during the months ahead.”