Construction industry leaders remained confident in February, according to Associated Builders and Contractors.
All three components of ABC’s Construction Confidence Index decreased for the month but remained above the diffusion index threshold of 50.
In February, ABC’s Construction Confidence Index decreased from 63.5 to 59.8 for staffing levels; from 59.3 to 57.9 for sales expectations; and from 53.7 to 51.8 for profit margin expectations.
Additionally, ABC’s Construction Backlog Indicator decreased from 8.4 months in January to 8.1 months in February, which is down 1.1 months from February 2023.
“Backlog is declining and confidence began to fade modestly in February,” said ABC Chief Economist Anirban Basu. “While it is far too early to predict an industrywide downturn given that confidence readings continue to signal growth along sales, employment and profit margin dimensions, it appears that a rising tide of project cancellations and postponements has begun to make its mark.
“With excess inflation remaining stubbornly durable, at least according to certain measures, interest rates are poised to remain higher for longer,” Basu continued. “That gives higher borrowing costs more time to upset the economic momentum that has so surprised economists over the past two years and has provided support for various nonresidential construction activities. With so much federal money still entering the economy, there will continue to be support for growth in certain construction segments, including public works and manufacturing-related megaprojects, but industry weakness is more apparent in segments that rely more purely on private financing.”
