Construction industry leaders’ confidence rose in January, according to www.abc.org.
All three components increased for the month and remained above the diffusion index threshold of 50.
In January, the Associated Builders and Contractors’ Construction Confidence Index increased from 59 to 60.7 for sales expectations; 52.3 to 55.6 for profit margin expectations; and 60.9 to 62.4 for staffing levels.
Additionally, ABC’s Construction Backlog Indicator declined from 9.2 months in December 2022 to nine months in January, which is one month higher than in January 2022.
“Despite extremely elevated borrowing costs, worker shortages and a generally downcast economic outlook, contractor confidence rebounded in January to a level not seen since the first half of 2022,” said ABC Chief Economist Anirban Basu. “Given the recent employment report, the U.S. economy continues to fend off recession. Some economists have concluded that rather than a hard or soft landing, the U.S. economy is headed for ‘no landing,’ meaning that economic growth will continue despite rising interest rates.
“However, the incredibly strong January jobs report makes it more likely that the Federal Reserve will maintain higher borrowing costs for a longer period,” Basu continued. “Eventually, that could cause the economic expansion to unravel, perhaps later this year. That could set the stage for diminished backlog and less confidence for contractors that specialize in privately financed projects as 2024 approaches.”
