Construction backlog, confidence remains low

The Associated Builders and Contractors (ABC) national trade association announced Tuesday that its Construction Backlog Indicator (CBI) fell to 7.8 months in April, the lowest it’s been in nearly eight years. The CBI is a forward-looking national economic indicator that shows work construction companies are contracted to do in the future, measured in dollars.

“Backlog has not been quite the protective shield that it normally is during the early stages of an economic downturn,” ABC Chief Economist Anirban Basu said in a statement.

Although the CBI fell in April, results from the most recent ABC member survey that was conducted April 20 through May 4 indicate that confidence among U.S. construction industry leaders was slightly higher than in March. But it’s still low — 55% of contractors expect their sales to decline during the next six months. Only one-third of survey respondents expect sales to increase.

The survey also collected results for the Construction Confidence Index (CCI), which reflects construction contractors’ perceptions of the business environment during a six-month period and prospects for commercial and industrial construction spending growth. The CCI is determined based on survey results. For April, the CCI findings included:

• The CCI for sales expectations increased from 38.1 to 41.1 in April. 
• The CCI for profit margin expectations increased from 36.6 to 39.8. 
• The CCI for staffing levels increased from 45.2 to 51.4.

Readings above 50 indicate growth, while readings below 50 are unfavorable.

“Given the large quantity of businesses that will likely not survive the public health and economic crisis, demand for construction services could be suppressed for quite some time,” Basu said in a statement. “Vacant storefronts, empty office suites and shattered state and local government finances do not serve as a solid foundation for robust demand for construction services.”

And although the CCI results show that sales, profit margins and staffing level expectations each increased from the March survey, the survey results still remain low, according to ABC.

“For construction activity to rebound briskly, the federal government is going to have to step forward and provide substantial assistance to state and local governments, including to finance infrastructure improvements,” Basu said in a statement.

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