Construction industry leaders remained confident in January, according to Associated Builders and Contractors.
Two of the three components of ABC’s Construction Confidence Index increased for the month and all three remained above the diffusion index threshold of 50.
In January, ABC’s Construction Confidence Index increased from 61.6 to 63.5 for staffing levels and from 58.9 to 59.3 for sales expectations. The index fell from 54.2 to 53.7 for profit margin expectations.
Additionally, ABC’s Construction Backlog Indicator decreased from 8.5 months in December 2023 to 8.4 months in January, which is down 0.6 months from January 2023.
“As predicted, performance in the nonresidential construction sector is becoming more disparate across segments,” said ABC Chief Economist Anirban Basu. “For much of the pandemic recovery period, contractors in virtually all segments were indicating stable to rising backlog. That remains the case for contractors most exposed to the nation’s industrial production. Reshoring and near-shoring continue to drive construction spending.
“In other categories, however, including those most interest rate-sensitive, activity appears to be slowing,” Basu continued. “Developer financing has become both more expensive and more difficult to obtain over roughly the past year, in part because of rising office vacancy in many markets. That helps to explain declining backlog in the commercial category. The decline in infrastructure-related backlog may be due only to seasonality, however. There is every reason to believe that contractors specializing in public works will have a very busy year.”
