Contractor confidence falls in April

May 12, 2022

Construction industry leaders’ confidence fell in April, according to www.abc.org.

Two of the three components declined for the month but all components remained above the diffusion index threshold of 50.

In April, the Associated Builders and Contractors’ Construction Confidence Index decreased from 65 to 63.1 for sales expectations and from 66.1 to 64.9 for staffing levels; it increased from 50.2 to 52.8 for profit margin expectations.

Additionally, ABC’s Construction Backlog Indicator increased from 8.3 months in March to 8.8 months in April.

“The U.S. economy is facing many headwinds, but for now, the nation’s nonresidential construction segment is handling them,” said ABC Chief Economist Anirban Basu. “One might think that skilled worker shortages, sky-high materials prices, rising interest rates and financial market volatility would have affected industry momentum. Instead, backlog continues to rise, and contractors continue to expect sales, employment and profit margins to expand over the next six months. Demand for construction services remains strong.

“Nonresidential construction is generally a sector that lags behind the broader economy, meaning emerging economic weakness will not show up in nonresidential construction data for months to come,” Basu continued. “It is conceivable that the risk of recession is overstated, and that contractors will thrive during the years ahead because of significant infrastructure spending. Conversely, it is possible that the combination of higher interest rates, stubborn inflation, depressed confidence, geopolitical conflict and an economywide downturn will have fundamentally altered the industry’s outlook a year from now. Only time will tell.”

Tags: Business | Trends

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