Construction industry leaders’ confidence decreased in August amid high materials prices and labor shortages, according to www.abc.org.
All three components fell in August but remained above the diffusion index threshold of 50.
In August, the Associated Builders and Contractors’ Construction Confidence Index decreased from 62.2 to 60.1 for staffing levels; 54 to 52.2 for profit margin expectations; and 63.1 to 61.3 for sales expectations.
Additionally, ABC’s Construction Backlog Indicator fell from 8.5 months in July to 7.7 months in August.
ABC Chief Economist Anirban Basu said higher materials prices and labor costs have led to projects being put on hold, and many projects have been made infeasible because of expanding costs.
“That said, it is still the case that contractors collectively anticipate sales, staffing levels and margins to rise over the next six months,” Basu said. “The expected pace of improvement has softened, however. With so much liquidity continuing to be injected into financial systems, investors have considerable sums to deploy in new investments. Real estate valuations and construction volumes benefit from such dynamics. Recent dips in commodity prices and more normal labor market functioning should help translate into slower cost escalations and rebounding backlog during the months ahead, ultimately reversing the backlog decline sustained in August.”
