ABC: Construction Backlog Indicator Rebounds in September, Contractor Confidence Improves

Associated Builders and Contractors reported that its Construction Backlog Indicator increased to 8.6 months in September, according to an ABC member survey conducted Sept. 20 to Oct. 4. The reading is down 0.4 months from September 2023.

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

Backlog increased in every region except for the Northeast in September. On a year-over-year basis, however, only the Middle States have longer backlog than one year ago.

ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels improved in September. The readings for all three components are above the threshold of 50, indicating expectations for growth over the next six months.

“Contractor confidence rebounded in September,” said ABC Chief Economist Anirban Basu. “While the reading for profit margins briefly dipped below the threshold of 50 in August, indicating net expectations of contraction, contractors are back to expecting modest expansion in their margins as of September. This optimism likely reflects falling interest rates, which will eventually serve as a tailwind for the industry, and the fact that materials prices have actually declined over the past year. Despite the improved outlook in September, contractor confidence is worse and backlog shorter than one year ago, suggesting that the effects of high interest rates continue to weigh on the industry.”

Note: The reference months for the Construction Backlog Indicator and Construction Confidence Index data series were revised on May 12, 2020, to better reflect the survey period. CBI quantifies the previous month’s work under contract based on the latest financials available, while CCI measures contractors’ outlook for the next six months. View the methodology for both indicators.

Source: Associated Builders and Contractors, Inc.