Construction industry leaders’ confidence fell in June but remains elevated, according to Associated Builders and Contractors.
All three components decreased for the month but remained above the diffusion index threshold of 50.
In June, ABC’s Construction Confidence Index decreased from 60.1 to 58.7 for sales expectations; 61.7 to 60.2 for staffing levels; and 55.1 to 53.2 for profit margin expectations.
Additionally, ABC’s Construction Backlog Indicator was unchanged at 8.9 months in June, which is unchanged from June 2022.
“Backlog once again remained stable in June despite tight credit conditions and high interest rates,” said ABC Chief Economist Anirban Basu. “While those risk factors drove a decline in all three Construction Confidence Index series, contractors continue to signal an expectation that sales, profit margins and staffing will expand over the second half of 2023.
“Many aspects of the economy, including consumer spending and the labor market, held up better than expected in the second quarter,” Basu continued. “That bodes well for economic growth over the summer but also suggests that the Federal Reserve may raise rates higher and keep them there longer in their ongoing efforts to suppress inflation. All else equal, that will reduce construction activity in the quarters to come.”
