Construction industry leaders’ confidence fell in June, according to www.abc.org.
All three components declined for the month; sales expectations and staffing levels remained above the diffusion index threshold of 50, and profit margins fell below 50 for the first time since October 2021.
In June, the Associated Builders and Contractors’ Construction Confidence Index decreased from 60.9 to 58.3 for sales expectations; from 62.8 to 59.6 for staffing levels; and from 50 to 49.4 for profit margin expectations.
Additionally, ABC’s Construction Backlog Indicator decreased from nine months in May to 8.9 months in June.
“Several months ago, there was conjecture that contractors were generally too upbeat regarding their collective future,” said ABC Chief Economist Anirban Basu. “Increasingly, the data suggest that they were. At the time, many contractors reported surging backlog and an ability to pass along hefty cost increases to project owners. For months, contractors expected sales, employment and margins to expand. The most recent ABC survey indicates that, to secure work and to induce project starts, a growing fraction of contractors is having to trim margins.”
Basu said although hardly catastrophic, the nonresidential construction marketplace is not as strong as expected in part because of high materials prices and stubborn labor shortages.
“In the context of rising fears of recession and rising borrowing costs, the stage has been set for softer nonresidential construction activity going forward,” Basu said. “That said, public contractors can expect to remain busy in the context of a significant infrastructure spending package. Still, the market may not prove as robust as anticipated given delayed project start dates as public agencies determine the right moment to purchase construction services. Despite all these considerations, contractors continue to expect industry sales and employment to expand over the next six months.”
