Construction industry leaders’ confidence continued to rise in January after increasing in December 2020, according to www.abc.org.
Two of the three components increased in January, and those same components—sales and staffing—were above the diffusion index threshold of 50. Contractors expect their profit margins to shrink during the next six months.
In January, the Associated Builders and Contractors’ Construction Confidence Index increased from 56.6 to 58.4 for sales expectations and 56.3 to 58.1 for staffing levels. The index fell from 48.6 to 47.5 for profit margin expectations.
“Though nonresidential construction spending has continued to recede for the better part of a year, the growing consensus is that the next six months will be a period of improvement,” said ABC Chief Economist Anirban Basu. “While backlog is down substantially from its January 2020 level and profit margins remain under pressure, more than half of contractors expect sales to rise over the next six months and nearly half expect to increase staffing levels.
“The anticipation is that the second half of the year will be spectacular for the U.S. economy from a growth perspective, which will help lift industry fortunes as 2022 approaches,” Basu continued. “But that is not the entire story. There are also public health and supply chain considerations. During the COVID-19 pandemic, many contractors experienced repeated interruptions in project work. Acquiring key materials and equipment has also become more difficult, with occasional price shocks for certain commodities. With vaccinations proceeding apace, many contractors will benefit from fewer interruptions going forward and the restart of many postponed projects.”
