Contractor confidence weakened in October

November 16, 2022
Construction industry leaders’ confidence weakened in October, according to 

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

In October, the Associated Builders and Contractors’ Construction Confidence Index increased from 55.1 to 57.2 for sales expectations. The index decreased from 59.8 to 58.9 for staffing levels and from 52.5 to 50.4 for profit margin expectations. 

Additionally, ABC’s Construction Backlog Indicator fell to 8.8 months in October.

“October’s survey data hinted at some emerging weakness in the nation’s nonresidential construction sector,” said ABC Chief Economist Anirban Basu. “While the industry continues to gain strength from significant funding for public work, pandemic-induced behavioral shifts—including remote work and online business meetings, as well as surging borrowing costs—are translating into meaningful declines in backlog in commercial and institutional segments.

“With borrowing costs likely to increase during the coming months and materials prices set to remain elevated, industry momentum could easily downshift further in 2023,” Basu continued. “But it is also conceivable that certain economists are overly pessimistic. There is still underlying momentum in the U.S. economy, and some believe that near-term recession is not inevitable. Contractor survey data indicate that while backlog declined in October, it remains reasonably healthy. Moreover, the average contractor continues to expect sales, staffing and margins to grow over the next six months. Time will tell whether this lingering optimism is justified.”

Tags: Business | Trends


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