Construction Backlog Declines to 8 Months Amid Market Uncertainty
Key Highlights
- Construction backlog in July dropped to 8.0 months, the lowest since January, indicating reduced project pipeline for contractors
- Most regions and industries experienced declines, except the South, which still maintains a larger backlog than a year ago
- ABC's Construction Confidence Index remains above 50, suggesting contractors expect growth over the next six months despite current setbacks
WASHINGTON, DC — Associated Builders and Contractors reported on August 11 that its Construction Backlog Indicator fell to 8.0 months in July, down 0.8 months from both a month and year ago.
The Construction Backlog Indicator measures the amount of commercial, industrial, and infrastructure work that contractors have already signed under contract but have not yet finished.
The most recent CBI was compiled from data collected in an ABC member survey conducted from July 20 to Aug. 4.
Backlog Declines - Confidence Remains
Every industry, region and company size experienced a decline in backlog in July. The South remains the only region with larger backlog than one year ago.
ABC’s Construction Confidence Index readings for sales and staffing levels also fell in July, while the reading for profit margins increased. The readings for all three components remain above the threshold of 50, indicating expectations for growth over the next six months.
“Backlog fell sharply in July and is down to the lowest level since January,” said ABC Chief Economist Anirban Basu. “The data center boom masks the depth of this weakness, as there is a lack of momentum in any other segment. The 88% of ABC contractors that are not under contract to work on a data center had an average 7.5 months of backlog. That compares poorly to the 12% that are under contract to work on data centers, which have 11.4 months of backlog. This dynamic has been particularly difficult for small and mid-size contractors. Backlog in the $30-$50 million annual revenue category, for instance, fell to the lowest level since March 2020.”
Note: The reference months for the Construction Backlog Indicator and Construction Confidence Index data series were revised on May 12, 2020, to better reflect the survey period. CBI quantifies the previous month's work under contract based on the latest financials available, while CCI measures contractors' outlook for the next six months. View the methodology for both indicators.
Visit abc.org/economics for the Construction Backlog Indicator and Construction Confidence Index, plus analysis of spending, employment, job openings and the Producer Price Index.