Construction industry leaders were more optimistic in March, according to Associated Builders and Contractors.
All three components of ABC’s Construction Confidence Index increased for the month and remained above the diffusion index threshold of 50.
In March, ABC’s Construction Confidence Index increased from 59.8 to 63.3 for staffing levels; from 57.9 to 61.9 for sales expectations; and from 51.8 to 52.4 for profit margin expectations.
Additionally, ABC’s Construction Backlog Indicator increased from 8.1 months in February to 8.2 months in March, which is down 0.5 months from March 2023.
“Given headwinds such as high borrowing costs, emerging supply chain issues, project financing challenges and labor shortages, the persistent optimism among nonresidential construction contractors is astonishing,” said ABC Chief Economist Anirban Basu. “Last month, contractors reported rising backlog and greater conviction regarding likely growth in sales, employment and profit margins.
“While certain readings are below year-ago levels, there was broad-based improvement in March,” Basu continued. “For instance, in the category of profit margins, 32% of those surveyed in February expected improvement over the next six months. That share rose to nearly 34% in March, with only 24% hinting at near-term margin compression. That indicates that though costs of delivering construction services continue to rise, contractors collectively enjoy enough pricing power to support stable to rising margins. If interest rates begin to decline during the summer as is widely expected, confidence is likely to climb further.”
