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Dive brief:
- The backlog decreased slightly to 8.4 months in January, according to a Feb. 13 release from Associated Builders and Contractors. This is the second consecutive decrease in the reading.
- Despite the decline across the sector, the backlog of work rose to 10.9 months in the heavy industry category, the highest on record for this sector. This figure is also 2.5 months higher than in January 2023, according to the statement. The portfolio decreases year after year in the commercial and institutional categories, as well as infrastructure.
- Some slowing sectors were often sensitive to interest rate fluctuations, ABC chief economist Anirban Basu said in the statement. In particular, Basu noted that funding for developers has become more expensive and difficult to obtain.
Diving knowledge:
Financing and interest rates have been a hot topic in the industry, especially since regulators singled out commercial real estate as main risk to financial stability in 2024.
The largest increases in the job portfolio were from the Northeast and the South, with growth to 8.7 from 8 and 11.7 from 10.4, respectively. Companies with more than $100 million in revenue saw their backlog rise to 13.0 from 10.7 in December. All other supports saw a reduction in future work.
Courtesy of Associated Builders and Contractors
“As predicted, performance in the non-residential construction sector is increasingly uneven across segments,” Basu said in the statement. “Through much of the pandemic recovery period, contractors in virtually all segments indicated that the backlog was stable and growing. This continues to be the case for contractors most exposed to the country’s industrial production. Relocation and quasi-shoring continue to drive construction spending.”
While interest rates explain the drag in office work, Basu said the slowdown in infrastructure may be due to seasonality.
“There is every reason to believe that specialty public works contractors will have a very busy year,” Basu said.
