Associated Builders and Contractors (ABC) reported its Construction Backlog Indicator fell to 8.4 months in October, according to a survey of its member contractors conducted Oct. 21 to Nov. 4. The reading is unchanged from October 2023.
Backlog fell in every region except the Northeast in October, reversing the previous month’s trend in which every region except the Northeast saw an increase. Only the middle states have longer backlog than one year ago.
ABC’s Construction Confidence Index readings for sales and staffing levels improved in October, while the reading for profit margins inched slightly lower. The readings for all three components are above the threshold of 50, indicating expectations for growth over the next six months.
“While backlog declined in October, it remains at a healthy level and has been remarkably stable over the past year,” said ABC’s chief economist, Anirban Basu. “Like much of the economy, the construction industry remained in some semblance of a holding pattern in October as project owners continue to wait for election outcomes and for interest rates to decline further. Despite this wait-and-see attitude, contractors remain upbeat about the next two quarters. Approximately 53% of ABC members expect their sales to increase over the next six months, while just 22% expect them to decline.”
Additionally, construction input prices increased 0.3% in October compared to the previous month, ABC stated following the most recent U.S. Bureau of Labor Statistics’ Producer Price Index. Nonresidential construction input prices also increased 0.3% for the month.
Prices increased in all three energy subcategories. Natural gas prices increased by 29.3%, unprocessed energy materials prices rose 9.9% and crude petroleum prices advanced by 7.3%. Overall construction input prices are 0.2% lower than a year ago, while nonresidential construction input prices are 0.5% lower.
“Higher energy prices drove the increase in construction input prices observed in October,” Basu said. “While prices for a few other materials, like concrete and copper products, also rose for the month, overall input prices are lower than they were one year ago and have fallen 5% since reaching an all-time high in June 2022.”
“Heading into 2025, it’s unclear if prices will remain so well-behaved,” Basu added. “The next administration’s trade policy increases uncertainty regarding construction materials costs. Beyond the implications of potential tariffs, input prices may rise in the short term if purchasers rush to import materials prior to the implementation of those policies. As of October, contractors expected their profit margins to expand through the first quarter of 2025, according to ABC’s Construction Confidence Index. That portion of the index will bear close watching as trade policy shifts in the coming months.”
