Construction industry leaders’ confidence rose in December 2020 after decreasing in November 2020, according to www.abc.org.
All three components increased in December 2020, and two of the three 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 December 2020, the Associated Builders and Contractors’ Construction Confidence Index increased from 49.4 to 56.6 for sales expectations; 43.4 to 48.6 for profit margin expectations; and 53.8 to 56.3 for staffing levels.
“While many contractors enter 2021 with significant trepidation, the most recent backlog and confidence readings suggest that the onset of vaccinations has generally led to more upbeat assessments regarding nonresidential construction’s future,” said ABC Chief Economist Anirban Basu. “Backlog is down substantially from its year-ago level and profit margins remain under pressure, yet many contractors expect to enjoy higher sales and to support more staff six months from now.
“The baseline expectation is that by the spring, the U.S. economy will blossom,” Basu continued. “With many households sitting on mounds of savings and sustaining pent-up demand for many goods and services, the U.S. economy is set for rapid growth as it reopens more fully during mid- to late 2021. While it will take time for that to fully translate into new construction projects, some that were postponed earlier during the pandemic are likely to come back to life over the next several months. That should help many contractors begin to rebuild backlog, and to eagerly await 2022.”
