Contractor confidence falls in May

June 15, 2022

Construction industry leaders’ confidence fell in May, according to www.abc.org.

All three components declined for the month; sales expectations and staffing levels remained above the diffusion index threshold of 50, and profit margins was at 50.

In May, the Associated Builders and Contractors’ Construction Confidence Index decreased from 63.1 to 60.9 for sales expectations; 64.9 to 62.8 for staffing levels; and 52.8 to 50 for profit margin expectations.

Additionally, ABC’s Construction Backlog Indicator increased from 8.8 months in April to nine months in May.

“It is simply remarkable that contractors continue to add to backlog amidst global strife, rising materials prices and ubiquitous labor force challenges,” said ABC Chief Economist Anirban Basu. “Backlog is up in every segment over the past year, including in the somewhat shaky commercial category. The largest increase in backlog has been registered in the industrial segment. More American companies are committing to place additional supply chain capacity in the United States, with Intel and Ford representing particularly recent and noteworthy examples.

“For contractors, the challenge will continue to be the cost of delivering construction services,” Basu continued. “The risk of severe increases in costs and substantial delays in delivery remains elevated given the volatility in input prices, the propensity of the labor force to shift jobs in large numbers and equipment shortages and delays. This ABC survey indicates that the proportion of contractors who expect that profit margins will expand over the next six months is declining, a reflection of lingering, worsening supply chain challenges.”

Tags: Business | Trends

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