ABC’s Construction Backlog Indicator Hits Highest Level Since 2019

Dec. 13, 2022 – The Associated Builders and Contractors has reported that its Construction Backlog Indicator grew to 9.2 months in November.

 

That’s 0.8 months more than the 8.4 months of backlog reported a year ago in November 2021.

It’s also the highest level since the second quarter of 2019.

The backlog indicator is based on an ABC member survey conducted from Nov. 21 to Dec. 6 of this year.

The increase in backlog observed in November is driven by commercial, institutional, and health-care construction. Also, it is largely attributed to contractors who have less than $30 million in revenue. It’s their highest level of backlog in over three years.

The index shows that profit margins and staffing increased in November, while sales inched lower. All three readings remain above the threshold of 50, indicating expectations of growth over the next six months.

“The rise in backlog is remarkable and unexpected,” said ABC Chief Economist Anirban Basu. “A number of contractors have been reporting that their backlog has risen rapidly over the past three months, which is counterintuitive given the pervasive view that the broader economy is headed into recession.”

Basu added that the backlog improvement was particularly sharp in the commercial and institutional category, and also that health care-related construction has emerged as a major driver of new activity. “While it seems unlikely that backlog will hold up in the face of the Federal Reserve’s efforts to slow demand,” said Basu, “many predicted the backlog would have dipped by now, and that has yet to transpire.”

Basu noted, “What’s more, many contractors expect sales and staffing levels to climb over the next six months, while profit margins are projected to remain stable.”