Contractor optimism falls again in September

October 13, 2021

Construction industry leaders’ confidence decreased in September amid supply chain issues and labor shortages, according to www.abc.org.

All three components fell in September but remained above the diffusion index threshold of 50.

In September, the Associated Builders and Contractors’ Construction Confidence Index decreased from 60.1 to 58.9 for staffing levels; 52.2 to 51.6 for profit margin expectations; and 61.3 to 60.7 for sales expectations.

Additionally, ABC’s Construction Backlog Indicator fell from 7.7 months in August to 7.6 months in September.

ABC Chief Economist Anirban Basu said although higher materials prices and labor costs continue to affect the construction industry, the good news is demand for construction services remains elevated.

“Many projects—whether those in health care, public education or data management—must move forward, and the data indicate that this is disproportionately benefiting larger contractors,” Basu said. “For the most part, recent declines in backlog have been registered among smaller construction firms. Low interest rates and abundant liquidity have created the capacity for many investors to deploy substantial capital, and that helps support investment in real estate and construction projects.

“Despite all the challenges facing the nonresidential construction industry, contractors collectively expect sales, staffing and profit margins to expand over the next six months, though the level of confidence has been diminished in recent months,” Basu continued.

Tags: Business | Trends

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