The construction backlog in the US has gone on to inch higher to 8.2 months in March 2024, the first gain in the year, as per an April 16 release from Associated Builders and Contractors- ABC.
Witnessed from a broader perspective, however, it has amounted to only a nominal enhancement, and the backlog still remains pretty down at 0.5 months as compared to March 2023.
According to ABC chief economist Anirban Basu, the contractors reported a rising backlog as well as a greater conviction in reference to the likely growth in sales, employment, and profit margins and given the headwinds like high borrowing expenditures, emerging supply chain challenges, project financing issues, and shortages of labor, the persistent optimism among the non-residential construction contractors looks quite astonishing.
Even if the backlog remains down in 2024, the construction confidence index from the ABC for sales, profit margins, and staffing levels all happened to post increases in March after a slight slowdown in February. The index goes on to indicate contractors’ anticipations for growth in the next six months, says ABC.
Basu adds that all this indicates that although the costs of delivering construction services go on to rise, contractors collectively make enough from pricing power in order to support stable to growing margins, and in case the interest rates begin to see a dip during the summer as is mostly expected, confidence is most likely to climb more.
Until then, though, the backlog may see a steep surge on the road to improvement, as seen in the most recent data.
It is well to be noted that overall the backlog happened to see a dip in March for every size of contractor, but not for those under $30 million in yearly revenue. Moreover, the backlog levels go on to remain much lower over 2023 for all the regions except the middle states, which now happen to have the second largest backlog level when it comes to any region in the U.S.
It is worth noting that the South goes on to have the largest backlog in spite of a large dip over 2023.