Construction industry leaders’ confidence rose in July, according to Associated Builders and Contractors.
Two of the three components increased for the month and one component decreased but all components remained above the diffusion index threshold of 50.
In July, ABC’s Construction Confidence Index increased from 60.2 to 60.4 for staffing levels and from 53.2 to 55 for profit margin expectations. The index decreased from 58.7 to 57.9 for sales expectations.
Additionally, ABC’s Construction Backlog Indicator increased from 8.9 months in June to 9.3 months in July, which is up 0.6 months from July 2022.
“Nonresidential construction backlog continues to expand, which is precisely what contractors had predicted six months ago,” said ABC Chief Economist Anirban Basu. “For many months, contractors have been signaling an expectation that demand for their services would continue to expand despite high and rising interest rates and a spate of regional bank failures.
“That said, there are some surprises in the data,” Basu continued. “Backlog declined in both the infrastructure and heavy industry categories, possibly because the current administration is striving to reserve many large-scale projects for unionized firms. ABC members are largely nonunion and therefore may be locked out of a meaningful proportion of significant opportunities. Diminished competition for such projects would tend to drive up construction service delivery charges, much of which are financed by American taxpayers.”
