ABC’s Backlog Indicator Reaches Highest Level Since 2019

Associated Builders and Contractors recently reported that its Construction Backlog Indicator increased to 9.2 months in November, according to an ABC member survey conducted Nov. 21 to Dec. 6. The reading is 0.8 months higher than in November 2021.

View ABC’s Construction Backlog Indicator and Construction Confidence Index tables for November 2022.

Backlog is now at its highest level since the second quarter of 2019. The increase in backlog observed in November is largely attributed to contractors with under $30 million in revenue, which now have their highest level of backlog in over three years.

ABC’s Construction Confidence Index reading for profit margins and staffing increased in November, while the reading for sales inched lower. All three readings remain above the threshold of 50, indicating expectations of growth over the next six months.

“The rise in backlog is remarkable and unexpected,” said ABC Chief Economist Anirban Basu. “A number of contractors have been reporting that their backlog has risen rapidly over the past three months, which is counterintuitive given the pervasive view that the broader economy is headed into recession.

“The improvement in backlog was particularly sharp in the commercial and institutional category, and health care-related construction has emerged as a major driver of new activity,” said Basu. “While it seems unlikely that backlog will hold up in the face of the Federal Reserve’s efforts to slow demand, many predicted that backlog would have dipped by now and that has yet to transpire. What’s more, many contractors expect sales and staffing levels to climb over the next six months, while profit margins are projected to remain stable.”