Dive brief:
- The construction backlog was reduced to 8.4 months in October, dropping from Slight rise in Septemberaccording to a Nov. 12 analysis of recent government data from builders and associated contractors.
- While the backlog narrowed, contractor confidence in sales and staff improved, according to ABC. Profit margins dipped slightly, but remained above the 50 threshold, indicating moderate growth expectations.
- “Like much of the economy, the construction industry remained in a semblance of a holding pattern in October as project owners continue to await election results and that interest rates fall further” said Anirban Basu, chief economist at ABC. “Despite this wait-and-see attitude, contractors remain optimistic around the next two quarters.”
Diving knowledge:
Job backlogs fell in all regions except the Northeast in October, reversing the trend from the previous month, where all regions except the Northeast posted an increase, according to ABC.
But the amount of work in the builders’ pipeline still remains at a healthy level despite the drop in October, Basu said. It added that the global construction backlog “has been remarkably stable over the past year,” with no change compared to October 2023.
The Federal Reserve’s recent 0.25 basis point rate cut, the second this year, has further bolstered contractor optimism. About 53% of ABC members expect sales to increase in the coming months, while only 22% expect them to decrease, the report found.
According to the report, the largest companies with more than $100 million in revenue posted the largest portfolio increases. Over the past year, these large companies, as well as companies with less than $30 million in revenue, managed to make gains in the amount of work they had.
