Construction industry leaders’ confidence rose in February, according to www.abc.org.
All three components increased for the month and remained above the diffusion index threshold of 50.
In February, the Associated Builders and Contractors’ Construction Confidence Index increased from 60.7 to 61.2 for sales expectations; 55.6 to 55.8 for profit margin expectations; and 62.4 to 62.8 for staffing levels.
Additionally, ABC’s Construction Backlog Indicator rose from nine months in January to 9.2 months in February, which is 1.2 months higher than in February 2022.
“Despite a gloomy economic forecast and extraordinarily elevated borrowing costs, contractor backlog and confidence continue to rise,” said ABC Chief Economist Anirban Basu. “This mirrors the broader economy, which has thus far proved resilient in the face of rising interest rates. While economic strength, particularly regarding labor demand, is surprising, interest rate increases typically take 12 to 18 months to affect the broader economy, and the first interest rate increase occurred in March 2022.
“While backlog remains at a historically elevated level, borrowing costs will continue to rise during the next several months, and contractors continue to struggle in the face of skilled labor shortages,” Basu continued. “If economic momentum fades this year, as a majority of forecasters continue to predict, then backlog and confidence may decline, especially for contractors working predominantly on privately financed projects.”