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Daily News

WASHINGTON, D.C. — Associated Builders and Contractors (ABC) reported that its Construction Backlog Indicator remained unchanged at 8.7 months in August, according to an ABC member survey conducted Aug. 22 to Sept. 7. The reading is a full month higher than in August 2021.

Backlog is down from the levels of the second quarter of 2022 but remains higher than at any point from March 2020 to March 2022. While the CBI reading fell for contractors in the South in August, it remains the U.S. region with the lengthiest backlog.

ABC’s Construction Confidence Index readings for sales, profit margins, and staffing levels increased in August. The index for profit margins bounced back into positive territory, while the sales and staffing level indices remained above 50, indicating expectations of growth over the next six months.

“Despite the high risk of recession, contractors collectively expect sales, employment, and profit margins to grow over the next six months,” ABC Chief Economist Anirban Basu said. “Backlog is down from the cyclical peak in early 2022 and has been roughly flat in recent months.

“The buoyancy of the nation’s non-residential construction marketplace is really quite remarkable,” Basu added. “Rising interest rates have already driven the single-family homebuilding market into recession, but brisk non-residential activity continues. Many non-residential contractors are operating at capacity, and their principal frustrations relate to supply-side issues like worker shortages, equipment-delivery delays, and elevated materials prices, as opposed to demand for their services.”

Daily News

WASHINGTON, D.C. — National non-residential construction spending increased 0.8% in July, according to an Associated Builders and Contractors (ABC) analysis of data published by the U.S. Census Bureau. On a seasonally adjusted annualized basis, non-residential spending totaled $847.6 billion for the month.

Spending was up on a monthly basis in 13 of the 16 non-residential subcategories. Private non-residential spending was up 0.4%, while public non-residential construction spending was up 1.5% in July.

“The non-residential sector continues to grapple with rising borrowing costs, elevated material and labor costs, and pervasive economic pessimism,” ABC Chief Economist Anirban Basu said. “Despite a modest increase in July, non-residential construction spending remains below its pre-pandemic level. There is, however, at least one bright spot for the industry: publicly financed construction. State and local governments are flush with cash, and considerable funding is slated for various forms of infrastructure. In July, spending in the highway and street category increased 4.4%, while spending in the public safety category rose 2.3%.

“For privately financed construction, circumstances could get worse before they get better,” Basu added. “The Federal Reserve recently recommitted to further tightening monetary policy. Market sentiment quickly turned negative. Rather than disappear, supply-chain challenges are proliferating in much of the world, including in Europe and China, and the risk of recession is elevated. This is simply not a set of circumstances conducive to rapid non-residential construction spending growth, and according to the most recent Construction Confidence Index, just 31% of contractors expect their profit margins to grow over the next six months.”

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