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News Jan. 12, 2023

Contractor confidence rose in December 2022 as backlog was unchanged

Construction industry leaders’ confidence rose in December 2022, according to 

Two of the three components increased for the month, and all components remained above the diffusion index threshold of 50. 

In December 2022, the Associated Builders and Contractors’ Construction Confidence Index increased from 56.8 to 59 for sales expectations and from 50.5 to 52.3 for profit margin expectations. The index decreased from 63 to 60.9 for staffing levels. 

Additionally, ABC’s Construction Backlog Indicator was unchanged at 9.2 months in December 2022, which is one month higher than in December 2021 and the highest level since the second quarter of 2019.

“Contractors enter the new year with plenty of optimism,” said ABC Chief Economist Anirban Basu. “Backlog remains elevated, which means that, even if the economy were to enter recession this year, contractors would likely be insulated from significant harm. Rather than fixate on the possibility of a recession, many contractors remain focused on growth, with expectations for rising sales and staffing levels over the next half year. Even the reading on profit margins increased this month, perhaps reflecting an improved supply chain.

“While 2023 continues to be filled with promise, contractors may soon show more concern,” Basu continued. “Anecdotal evidence suggests that financing commercial real estate projects is more difficult, due in part to recession predictions. The general increase in the cost of capital has also jeopardized many projects, with certain contractors noticing an increase in postponements.”


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