Contractor confidence falls in March

April 13, 2022

Construction industry leaders’ confidence fell in March, according to

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

In March, the Associated Builders and Contractors’ Construction Confidence Index decreased from 66.8 to 65 for sales expectations; 66.3 to 66.1 for staffing levels; and 56.2 to 50.2 for profit margin expectations.

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

“Demand for construction services remains strong despite sky-high materials prices, skills shortages and elevated bids,” said ABC Chief Economist Anirban Basu. “ABC contractors indicate that demand will remain strong, with 65% of contractors expecting sales to grow over the next six months. Backlog increased in March, indicating that bidding opportunities remain plentiful. The recent rise in interest rates could induce certain project owners to move forward with construction work to access affordable investment capital while it remains available. It is also conceivable that at some point private demand for construction services will decline as the cost of capital rises.”

However, Basu said more than three-quarters of contractors indicate they recently suffered a setback in delivering construction services.

“Among the primary factors are a lack of sufficiently skilled workers, as well as materials and equipment shortages.” Basu said. “These dynamics will continue to increase the cost of construction delivery during months to come. The Russia-Ukraine war has exacerbated inflationary pressures and will likely result in more aggressive monetary tightening by the Federal Reserve. For now, the average contractor expects to be able to pass along a significant fraction of the cost increases to project owners. It remains to be seen whether that will persist as interest rates rise.”

Tags: Business | Trends


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