ABC’s Construction Backlog Indicator Rebounds in March, Contractor Confidence Improves
Associated Builders and Contractors reported that its Construction Backlog Indicator increased to 8.2 months in March from 8.1 months in February, according to an ABC member survey conducted March 20 to April 3. The reading is down 0.5 months from March 2023.
View ABC’s Construction Backlog Indicator and Construction Confidence Index tables for March. View the full Construction Backlog Indicator and Construction Confidence Index data series.
Backlog is down over the past year for every region except for the Middle States, which now has the second largest backlog of any region. The South continues to have the largest backlog despite a large decline over the past year.
ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels increased in March. All three readings remain above the threshold of 50, indicating expectations for growth over the next six months.
“Given headwinds such as high borrowing costs, emerging supply chain issues, project financing challenges and labor shortages, the persistent optimism among nonresidential construction contractors is astonishing,” said ABC Chief Economist Anirban Basu. “Last month, contractors reported rising backlog and greater conviction regarding likely growth in sales, employment and profit margins.
“While certain readings are below year-ago levels, there was broad-based improvement in March,” said Basu. “For instance, in the category of profit margins, 32% of those surveyed in February expected improvement over the next six months. That share rose to nearly 34% in March, with only 24% hinting at near-term margin compression. That indicates that though costs of delivering construction services continue to rise, contractors collectively enjoy enough pricing power to support stable to rising margins. If interest rates begin to decline during the summer as is widely expected, confidence is likely to climb further.”
Dodge Construction Network
Dodge Momentum Index Fell 9% in March
The Dodge Momentum Index (DMI), issued by Dodge Construction Network, fell 8.6% in March to 164.0 (2000=100) from the revised February reading of 179.5. Over the month, commercial planning fell 3.2% and institutional planning dropped 17.2%.
In March, a total of 14 projects valued at $100 million or more entered planning. The largest commercial projects included the $215 million Microsoft Data Center in San Antonio, Texas, and the $158 million Melrod Data Center Building B in Fredericksburg, Virginia. The largest institutional projects comprised the $277 million Trident Health Hospital in Johns Island, South Carolina and the $220 million Sunset Amphitheater in McKinney, Texas.
U.S. Census Bureau
Total Construction
Construction spending during February 2024 was estimated at a seasonally adjusted annual rate of $2,091.5 billion, 0.3 percent (±0.8 percent)* below the revised January estimate of $2,096.9 billion. The February figure is 10.7 percent (±1.3 percent) above the February 2023 estimate of $1,889.6 billion. During the first two months of this year, construction spending amounted to $298.1 billion, 11.9 percent (±1.3 percent) above the $266.5 billion for the same period in 2023.
Private Construction
Spending on private construction was at a seasonally adjusted annual rate of $1,617.1 billion, virtually unchanged from (±0.7 percent)* the revised January estimate of $1,616.8 billion. Residential construction was at a seasonally adjusted annual rate of $901.1 billion in February, 0.7 percent (±1.3 percent)* above the revised January estimate of $894.5 billion. Nonresidential construction was at a seasonally adjusted annual rate of $716.0 billion in February, 0.9 percent (±0.7 percent) below the revised January estimate of $722.3 billion.
Public Construction
In February, the estimated seasonally adjusted annual rate of public construction spending was $474.4 billion, 1.2 percent (±1.5 percent)* below the revised January estimate of $480.1 billion. Educational construction was at a seasonally adjusted annual rate of $100.5 billion, 1.8 percent (±2.0 percent)* below the revised January estimate of $102.3 billion. Highway construction was at a seasonally adjusted annual rate of $147.3 billion, 1.6 percent (±4.8 percent)* below the revised January estimate of $149.7 billion.
Construction Sector Adds 39,000 Jobs Between February And March With Increases In Every Residential And Nonresidential Category
Monthly Pickup is the Largest Since January 2023, While the Industry’s 5.4 Percent Unemployment Rate Is the Lowest March Rate in Five Years; However Record Job Openings Show Firms Need More Workers
The construction industry added 39,000 jobs in March—the most since January 2023—with gains among all five types of residential and nonresidential categories, according to an analysis of new government data the Associated General Contractors of America released today. Association officials cautioned, however, that firms are still coping with significant labor shortages that are undermining broader growth in the sector.
The sector has added 270,000 jobs during the past 12 months, a 3.4 percent increase. Residential builders added 5,500 employees in March, while residential specialty trade contractors added 8,900. Employment rose as well among nonresidential construction firms, by 2,300 at building construction firms, 16,300 at specialty trade contractors, and 6,000 at heavy and civil engineering construction firms.
Average hourly earnings for production and non-supervisory employees in construction—covering most onsite craft workers as well as many office workers—climbed by 4.9 percent over the year to $35.42 per hour. Construction firms in March provided a wage “premium” of 18.9 percent compared to the average hourly earnings for all private-sector production employees.
One reason for the rapid wage gains is that the industry continues to struggle to find enough workers to hire. Simonson noted that a different federal report released earlier showed there were 414,000 job openings at the end of February, the highest number of open positions yet recorded for the month.
View the construction employment data.
Nonresidential Construction Spending Decreases in 15 Out of 16 Segments in February
WASHINGTON, April 1—National nonresidential construction spending declined 1.0% in February, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.179 trillion.
Spending was down in a monthly basis in 15 of the 16 nonresidential subcategories. Private nonresidential spending fell 0.9%, while public nonresidential construction spending was down 1.2% in February.
“Virtually every nonresidential construction segment experienced a decline in spending in February,” said ABC Chief Economist Anirban Basu. “In certain instances, the monthly decline was sharp, including health care (-2.2%), commercial (-1.9%) and water supply (-1.8%). The optimist will likely shrug off both the January and February nonresidential construction spending declines as merely reflecting winter weather. The pessimist will proclaim this release a wake-up call to contractors and an indication that higher interest rates have finally begun to make their mark.
“As always, interpreting the data is complicated,” said Basu. “While 15 of 16 nonresidential construction segments recorded monthly declines on a seasonally-adjusted basis, all segments have experienced year-over-year growth in spending. In 10 instances, construction spending has increased more than 10%, including 36% growth in the public safety category and 32% in manufacturing. Moreover, ABC’s Construction Confidence Index indicates that contractors remain confident with respect to their sales over the next six months, signaling that the data could improve with the weather.”
