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News June 18, 2024

Contractors remained confident in May

Construction industry leaders remained confident in May, according to Associated Builders and Contractors.

Two of three components of ABC’s Construction Confidence Index decreased for the month but all remained above the diffusion index threshold of 50.

In May, ABC’s Construction Confidence Index increased from 59.7 to 59.9 for sales expectations. The index decreased from 64.2 to 61.6 for staffing levels and from 52.3 to 51.7 for profit margin expectations.

Additionally, ABC’s Construction Backlog Indicator decreased from 8.4 months in April to 8.3 months in May, which is down 0.6 months from May 2023.

“Over a year has passed since the Federal Reserve raised the target range of the federal funds rate above 5%,” said ABC Chief Economist Anirban Basu. "Despite widespread expectations that rates will remain elevated through at least the end of the year, contractors remain confident about the future, with a majority of contractors expecting their sales and staffing levels to expand over the next six months.

“Although backlog has been lower in 2024 than it was during 2023, it has also been stable,” Basu continued. “While significant spending activity in manufacturing and infrastructure-related segments has kept contractors busy, input cost escalation has reemerged in recent months. As a result, contractor confidence regarding profit margins has fallen to the lowest level since November 2023.”

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