American Contractors May Struggle to Secure Work This Summer

American contractors may face difficulties in securing work this summer due to a decrease in the construction backlog. 

The Associated Builders and Contractors (ABC) Construction Backlog Indicator showed that the average time for projects decreased to 8.7 months in March and April 2023, a 0.4-month increase compared to March 2022.

The construction Backlog Indicator Shows a Decrease in Average Time for Projects

South Continues to Buck Trend with High Levels of Building Activity

The Southern region continues to be an exception, with ongoing and upcoming building activity resulting in no monthly decrease in the backlog. However, every other region in the United States sees a decline in the backlog, making it more challenging for contractors to secure work.

ABC’s Construction Confidence Index Suggests Mixed Results

While the figures for profit margins and staffing levels declined in March, the sales figure increased somewhat according to ABC’s Construction Confidence Index. The figures suggest mixed results, with some aspects of the industry potentially improving while others decline.

Chief Economist Warns of Potential Slowdown in Nonresidential Construction

ABC’s Chief Economist Anirban Basu warns that the deceleration in nonresidential construction activity may have started. The widespread fears of a recession, worsening financing conditions, and more decision-makers focusing on cost-cutting could lead to challenges for contractors in lining up new construction work. Although the backlog and confidence indicators declined in March, they still show a slowing of activity rather than a change for the worse. The bankruptcies of Silicon Valley Bank and Signature Bank have led to a commonly held belief that financial conditions are becoming tighter. If this is the case, the economy may continue to slow down, and business confidence may decline in the coming months.