Contractors surveyed by Associated Builders and Contractors say expectations for growth in profit margins has risen minimally, according to the group’s Construction Confidence Index. The index threshold is 50, and confidence for profit margins sat at 50.9 in September.
“Contractor confidence rebounded in September," said Anirban Basu, chief economist ABC, in a statement. “While the reading for profit margins briefly dipped below the threshold of 50 in August, indicating net expectations of contraction, contractors are back to expecting modest expansion in their margins as of September. This optimism likely reflects falling interest rates, which will eventually serve as a tailwind for the industry, and the fact that materials prices have actually declined over the past year. Despite the improved outlook in September, contractor confidence is worse and backlog shorter than one year ago, suggesting that the effects of high interest rates continue to weigh on the industry.”
ABC’s Construction Backlog Indicator rose to 8.6 months in September, down 0.4 months from September 2023.
Only the infrastructure category experienced a monthly decrease in backlog among the three major segments. Nonetheless, over the past year, backlog has decreased in all segements except heavy industrial.
