Backlog in infrastructure projects increased to 8.2 months in June, compared to 8.0 months in May and -3.0 months a year ago, according to the Associated Builders and Contractors (ABC) Construction Backlog Indicator. The indicator inched up to 8.4 months in June from 8.3 months in May, according to an ABC member survey conducted June 20 to July 3. The reading is down 0.5 months from June 2023.
Backlog increased on a monthly basis for all categories of company size, with only those making above $100 million in annual revenue at a lower backlog than in June 2023.
“Backlog continues to hold up remarkably well despite high interest rates, inflation, and emerging weakness in the broader economy," said Anirban Basu, ABC chief economist in a statement. “While contractor confidence regarding the outlook for sales and staffing levels fell modestly in June, all three Construction Confidence Index components are higher than they were one year ago."
ABC’s Construction Confidence Index readings for sales and staffing levels fell slightly in June, while the reading for profit margins improved. All three readings remain above the threshold of 50, indicating expectations for growth over the next six months.
“The combination of slowing inflation and softening growth suggests that the Federal Reserve may begin to lower interest rates as soon as September,” said Basu. “That will buoy backlog as some of the softer construction segments, like office and commercial, benefit from lower borrowing costs and looser lending standards.”
