ABC Survey: Backlog Grows as Prices Increase, Contractor Confidence Drops

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June 14, 2022 James Leggate KEYWORDS Anirban Basu / Associated Builders and Contractors / construction backlog indicator / material costs Order Reprints No Comments The Associated Builders and Contractors Construction Backlog Indicator rose to nine months in May even as contractor confidence declined, the industry group said June 14.ABC's backlog indicator, which is calculated using contractors' revenues from the previous year and current backlog, was up from 8.8 months in April and from 8 months in May 2021. The greatest backlog by sector was in infrastructure, which rose to 9.3 months in May, surpassing commercial and institutional, which had the greatest backlog a month earlier. Despite the growing backlogs, contractors felt less optimistic about the next six months, ABC's Construction Confidence Index shows. Based on surveys of nonresidential contractors and calibrated on a 0-100 scale, the index revealed fewer contractors expecting to increase their sales or profit margins as of May compared to a month earlier or a year earlier, and more contractors expecting their sales and profit margins to decrease. In a statement, ABC chief economist Anirban Basu said it "Is simply remarkable that contractors continue to add to backlog amidst global strife, rising materials prices and ubiquitous labor force challenges." He noted the largest backlog increase was in the industrial segment, in part because of big companies like Intel and Ford expanding their U.S. manufacturing. "For contractors, the challenge will continue to be the cost of delivering construction services," Basu said. "Based on the historical lag between the performance of the economy and nonresidential construction spending, more difficult times could be ahead for contractors in 2024 or 2025," Basu said.