Construction Backlog And Contractor Optimism Rise To Start 2021

Washington, DC - The Associated Builders and Contractors (ABC) reports that its Construction Backlog Indicator rose to 7.5 months in January 2021, an increase of 0.2 months from its December 2020 reading, according to an ABC member survey conducted from Jan. 20 to Feb. 2.

Despite the monthly uptick, backlog is 0.9 months lower than in January 2020.

ABC’s Construction Confidence Index readings for sales and staffing levels increased in January and remain above the threshold of 50, indicating expectations of growth over the next six months. The index reading for profit margins remained below that threshold, slipping to 47.5 in January.

“Though nonresidential construction spending has continued to recede for the better part of a year, the growing consensus is that the next six months will be a period of improvement,” said ABC Chief Economist Anirban Basu. “While backlog is down substantially from its January 2020 level and profit margins remain under pressure, more than half of contractors expect sales to rise over the next six months and nearly half expect to increase staffing levels.

“The anticipation is that the second half of the year will be spectacular for the U.S. economy from a growth perspective, which will help lift industry fortunes as 2022 approaches,” said Basu. “But that is not the entire story. There are also public health and supply chain considerations. During the COVID-19 pandemic, many contractors experienced repeated interruptions in project work. Acquiring key materials and equipment has also become more difficult, with occasional price shocks for certain commodities. With vaccinations proceeding apace, many contractors will benefit from fewer interruptions going forward and the restart of many postponed projects.”

Click here to see a 90-second video from ABC’s chief economist on what the latest survey data mean for the construction industry.

About The Associated Builders And Contractors

Associated Builders and Contractors is a national construction industry trade association representing more than 21,000 members. Founded on the merit shop philosophy, ABC and its 69 chapters help members develop people, win work and deliver that work safely, ethically and profitably for the betterment of the communities in which ABC and its members work. ABC's membership represents all specialties within the U.S. construction industry and is comprised primarily of firms that perform work in the industrial and commercial sectors. To learn more, visit www.abc.org.