Contractor optimism continues to rise

January 12, 2022

Construction industry leaders’ confidence continued to increase in December 2021, according to www.abc.org.

All three components rose for the month and were above the diffusion index threshold of 50.

In December 2021, the Associated Builders and Contractors’ Construction Confidence Index increased from 50.9 to 57.4 for profit margin expectations; 62.5 to 64.6 for staffing levels; and 65.2 to 66.3 for sales expectations.

Additionally, ABC’s Construction Backlog Indicator fell from 8.4 months in November 2021 to 8.2 months in December 2021.

“Demand for construction services in America remains strong,” said ABC Chief Economist Anirban Basu. “Contractors have been upbeat about sales and employment prospects for months. What changed in December is that a growing fraction of contractors now believe that profit margins will rise during the next six months despite rising costs due to labor shortages and volatile materials prices.

“Backlog fell in the infrastructure category, but activity in that category is set to heat up in 2022 as federal infrastructure funds tied to the Infrastructure Investment and Jobs Act of 2021 begin to flow,” Basu continued. “Backlog in the heavy industrial category also declined on a monthly basis, but over the past year backlog in this segment has climbed dramatically as manufacturers attempt to address goods shortages and more CEOs consider bringing some of their supply chains back to America. Industry backlog could be negatively impacted by elevated steel and other materials prices, with some projects cancelled and others redesigned to shift away from intense steel use.”

Tags: Business | Trends

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