Associated Builders and Contractors (ABC) reported Tuesday that its Construction Backlog Indicator rose to 8.4 months in June. This increase is based on an ABC member survey conducted between June 20 and July 3. However, the reading is down 0.5 months compared to June 2023.
The decline over the past year stems from the Middle States and Northeast regions. In contrast, the South and West regions experienced no change in backlog from June 2023 to June 2024.
ABC's Construction Confidence Index showed slight declines in sales and staffing levels for June, while profit margins saw improvement. Despite the mixed changes, all three metrics remain above the 50 threshold, indicating anticipated growth over the next six months.
ABC Chief Economist Anirban Basu noted the resilience of backlog amid economic challenges. “Backlog continues to hold up remarkably well despite high interest rates, inflation and emerging weakness in the broader economy,” said Basu. “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.”
Basu also mentioned potential future economic conditions. “The combination of slowing inflation and softening growth suggests that the Federal Reserve may begin to lower interest rates as soon as September. That will buoy backlog as some of the softer construction segments, like office and commercial, benefit from lower borrowing costs and looser lending standards.”
