South leads U.S. in construction backlog

by Christopher Brinckerhoff | November 16, 2023 4:01 pm

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Associated Builders and Contractors (ABC) reported its Construction Backlog Indicator declined to nine months in September, according to an ABC member survey conducted Sept. 20 to Oct. 4. The reading is equivalent to one year ago.

Though it declined in September, the South continues to have the lengthiest backlog, which has been the case since October 2021. Over the past year, only the West has experienced increasing backlog.

ABC’s Construction Confidence Index reading for sales and staffing levels edged higher in September. Profit margins reading fell slightly. All three readings remain above the threshold of 50, indicating expectations for growth over the next six months.

“Construction continues to defy the downward gravitational pull of tightening credit conditions,” says ABC chief economist Anirban Basu. “Despite high and rising project financing costs, ABC contractor members continue to report lofty backlog, rising employment, expanding sales and stable profit margins.

“That said, industry headwinds grow in force,” says Basu. “Interest rates are still edging higher. Political dysfunction in Washington persists. Rising worker compensation costs and lingering supply chain issues are still frustrating industry performance and profitability. The U.S. economy appears poised to slow further. If the past is any indication, that will eventually catch up to construction in the form of dissipating demand. But economists have talked about recession for more than a year, and the industry still shows substantial forward momentum. It remains to be seen whether that momentum can survive the latest set of challenges.”

Click here to view ABC’s Construction Backlog Indicator[2] and here to view the Construction Confidence Index tables for September.[3]

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