Construction industry leaders’ confidence fell in November after increasing in October, according to www.abc.org.
All three components decreased in November, and one of the three components—staffing—was above the diffusion index threshold of 50. Contractors expect their sales and profit margins to shrink during the next six months.
In November, the Associated Builders and Contractors’ Construction Confidence Index decreased from 52.7 to 49.4 for sales expectations; 47.1 to 43.4 for profit margin expectations; and 56.6 to 53.8 for staffing levels.
“When the pandemic first struck down the economic expansion during the February-April time frame, construction emerged as a relative bulwark of stability,” said ABC Chief Economist Anirban Basu. “The sector’s essential industry status in most parts of the country, combined with significant pre-existing backlog, allowed much of the industry’s activity to persist even as restaurant, retail, hotel, transportation, tourism and other segments suffered massive setbacks. But the protective shields that helped sustain industry performance have begun to weaken.
“Many projects have been postponed, while others have been cancelled,” Basu continued. “New bidding opportunities have become rarer, helping to push backlog lower. The prospect of additional lockdowns hasn’t helped, with many investors remaining too uncertain to bring the next generation of commercial projects to market. Lending conditions have tightened. Many segments have been battered financially, including healthcare, certain manufacturing sectors and lodging. A number of contractors also report project delivery interruptions as workers become infected. That has helped to dampen confidence, with contractors collectively indicating expectations for lower sales and profit margins over the next six months. At the same time, the emergence of vaccine candidates provides light at the end of the tunnel, but 2021 is shaping up to be a challenging year for many contractors.”
