Economics
ABC Construction Backlog Indicator Falls in August
Contractor backlogs are down by nearly a month, but a return to supply chain normalcy could erase that loss
The Associated Builders and Contractors (ABC) Construction Backlog Indicator fell to 7.7 in August, according to a member survey performed in the second half of the month. The figure is down by 0.8 months from July’s 8.5-month backlog, and it is 0.3 months lower than the reading in August 2020 of 8 months.
“Both contractor backlog and confidence have begun to fade,” said Anirban Basu, chief economist at ABC, in a press release. “Higher materials prices and labor costs have conspired to put more projects on hold. In many instances, expanding costs have rendered projects infeasible."
The infrastructure sector backlog experienced the largest drop, of 3.6 months, while heavy industrial fell 2.7 months. The backlog indicator for commercial and institutional construction saw a smaller decline, of 0.5, since July. Regionally, the west experienced the largest drop in backlog at 1.6 months, while the middle states’ backlog increased, at a rate of 0.3 months.
Despite the overall decline, "it is still the case that contractors collectively anticipate sales, staffing levels and margins to rise over the next six months,” said Basu. “The expected pace of improvement has softened, however. Recent dips in commodity prices and more normal labor market functioning should help translate into slower cost escalations and rebounding backlog during the months ahead, ultimately reversing the backlog decline sustained in August.”
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