Contractor optimism continues to grow

April 20, 2021

Construction industry leaders’ confidence rose again in March after increasing in February, according to www.abc.org.

All three components increased in March and were above the diffusion index threshold of 50.

In March, the Associated Builders and Contractors’ Construction Confidence Index increased from 64.8 to 65.8 for sales expectations; 61.4 to 63.7 for staffing levels; and 51.2 to 53.7 for profit margin expectations.

Additionally, ABC’s Construction Backlog Indicator fell to 7.8 months in March.

“There are two countervailing forces influencing backlog,” said ABC Chief Economist Anirban Basu. “On the one hand, design work on new projects declined during most of the pandemic. Some of this is attributable to the need to socially distance, risk aversion and the jarring effects of the crisis on commercial real estate. The result has been fewer projects presently available for bid, which is consistent with declining backlog.

“On the other hand, the surprisingly strong economic recovery has brought projects that seemed dead back to life,” Basu continued. “The boom in e-commerce and other tech segments has also produced greater levels of demand for construction of fulfillment and data centers. The overall result is that backlog is roughly where it was six months ago. Given that contractors remain confident regarding sales, employment and profit margins over the balance of the year, the expectation is that more projects will enter the design phase, bidding opportunities are set to rise and at some point backlog will reestablish an upward trajectory.”

Tags: Business | Trends

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