Some construction industry leaders were less optimistic in March amid elevated tariff rates, according to Associated Builders and Contractors.
Two of the three components of ABC’s Construction Confidence Index fell for the month, but all three were above the diffusion index threshold of 50.
In March, ABC’s Construction Confidence Index increased from 64 to 64.2 for staffing levels; fell from 64.5 to 62.6 for sales expectations; and fell from 54.8 to 52.7 for profit margin expectations.
Respondents who completed the survey after the April 2 tariffs announcement were significantly less optimistic—fewer than 26% of those respondents expected their profit margins to expand during the next six months, and more than 40% expected them to contract.
Additionally, ABC’s Construction Backlog Indicator rose from 8.3 months in February to 8.5 months in March, which is up 0.3 months from March 2024.
“Backlog increased in March and contractors remained optimistic regarding the future, but this largely reflects contractor activity and sentiment prior to April 2, when the most consequential economic policy in several decades was announced,” said ABC Chief Economist Anirban Basu.
“Approximately 80% of ABC contractors surveyed indicate that suppliers have notified them of tariff-related materials price increases, and nearly 20% of contractors surveyed had projects paused or interrupted because of tariffs during March,” Basu continued. “These tariffs have already materially diminished the outlook for construction activity in 2025. Many businesses are poised to delay or even cancel planned capital investments given the current business environment and daily market convulsions. Conditions will likely deteriorate further if elevated tariff rates remain in place for any meaningful length of time.”
