Associated Builders and Contractors (ABC) reported that its Construction Backlog Indicator rose to a stable 8.0 months in total in May, 0.1 months higher than in April 2021 and May 2020. The commercial and institutional sector rose by 0.2 since May 2020, heavy industrial rose 1.4 percent, and infrastructure was down by -0.6.
“Nonresidential construction backlog continues to edge higher, consistent with expectations that sales, profit margins and staffing will expand over the next six months,” said ABC chief economist Anirban Basu. “For at least four reasons, this represents an extraordinary set of findings.
He also says materials prices have risen significantly over the past year, and labor costs are also on the rise. However, the demand for construction services is strong enough to generate sufficient pricing power to more than “fully countervail those factors.”
Backlog in the infrastructure category also rose significantly in May, possibly reflecting a stronger state and local government balance sheets and associated increases in infrastructure outlays.
While ABC’s Construction Confidence Index readings for sales increased modestly in May, confidence regarding profit margins and staffing levels slipped. All three indices remain above the threshold of 50.
