Associated Builders and Contractors reported that its Construction Backlog Indicator declined to 8.1 months in February, according to an ABC member survey conducted Feb. 20 to March 5. The reading is down 1.1 months from February 2023.
View ABC’s Construction Backlog Indicator and Construction Confidence Index tables for February. View the full Construction Backlog Indicator and Construction Confidence Index data series.
Backlog fell for every size of contractor except for those with under $30 million in annual revenues in February. Over the past year, however, the largest contractors—those with greater than $50 million in revenues—have experienced the greatest decline in backlog.
ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels also decreased in February. However, all three readings remain above the threshold of 50, indicating expectations for growth over the next six months.
“Backlog is declining and confidence began to fade modestly in February,” said ABC Chief Economist Anirban Basu. “While it is far too early to predict an industry-wide downturn given that confidence readings continue to signal growth along sales, employment and profit margin dimensions, it appears that a rising tide of project cancellations and postponements has begun to make its mark.
“With excess inflation remaining stubbornly durable, at least according to certain measures, interest rates are poised to remain higher for longer,” said Basu. “That gives higher borrowing costs more time to upset the economic momentum that has so surprised economists over the past two years and has provided support for various nonresidential construction activities. With so much federal money still entering the economy, there will continue to be support for growth in certain construction segments, including public works and manufacturing-related megaprojects, but industry weakness is more apparent in segments that rely more purely on private financing.”
Construction Employment Increases In 37 States From January 2023 To January 2024, While 33 States Add Jobs Between December And January
Construction employment increased in 37 states in January from a year earlier, while 33 states added construction jobs between December and January, according to a new analysis of federal employment data released by the Associated General Contractors of America today. Association officials noted that demand for construction remains strong in many parts of the country, but cautioned that labor shortages are restraining employment gains in the sector.
“This report confirms that construction demand remains robust in most states, especially for data centers, manufacturing, and power projects,” said Ken Simonson, the association’s chief economist. “But contractors are scrambling to find qualified workers, which is keeping more states from posting employment increases.” Read more.
US Census Bureau
Monthly Construction Spending, January 2024
Total Construction
Construction spending during January 2024 was estimated at a seasonally adjusted annual rate of $2,102.4 billion, 0.2 percent (±0.8 percent)* below the revised December estimate of $2,105.8 billion. The January figure is 11.7 percent (±1.5 percent) above the January 2023 estimate of $1,882.2 billion.
Private Construction
Spending on private construction was at a seasonally adjusted annual rate of $1,623.4 billion, 0.1 percent (±0.7 percent)* above the revised December estimate of $1,622.3 billion. Residential construction was at a seasonally adjusted annual rate of $900.8 billion in January, 0.2 percent (±1.3 percent)* above the revised December estimate of $899.1 billion. Nonresidential construction was at a seasonally adjusted annual rate of $722.6 billion in January, 0.1 percent (±0.7 percent)* below the revised December estimate of $723.2 billion.
Public Construction
In January, the estimated seasonally adjusted annual rate of public construction spending was $479.0 billion, 0.9 percent (±1.5 percent)* below the revised December estimate of $483.5 billion. Educational construction was at a seasonally adjusted annual rate of $101.5 billion, 0.7 percent (±3.1 percent)* below the revised December estimate of $102.3 billion. Highway construction was at a seasonally adjusted annual rate of $150.1 billion, 2.1 percent (±3.6 percent)* below the revised December estimate of $153.3 billion.
The Dodge Momentum Index (DMI), issued by Dodge Construction Network, fell 1.4% in February to 180.5 (2000=100) from the revised January reading of 183.0. Over the month, commercial planning fell 2.3% and institutional planning ticked up 0.1%.
“Weaker office and healthcare planning constrained nonresidential planning in February,” stated Sarah Martin, associate director of forecasting for Dodge. “However, the Index remains 25% higher than where it was just two years ago. Most other categories showed growth over the month and Dodge remains optimistic that nonresidential planning will stay elevated throughout 2024 alongside rising confidence in 2025 market conditions.”
Slower growth in office planning pulled down the commercial portion of the Index this month. On the institutional side, slower healthcare and amusement planning was offset by stronger education planning, keeping this portion of the DMI flat in February. Year over year, the DMI was 1% higher than in February 2023. The commercial segment was down 10% from year-ago levels, while the institutional segment was up 27% over the same period.
In February, a total of 17 projects valued at $100 million or more entered planning. The largest commercial projects included the $220 million QTS Data Center in Fort Worth, Texas, and the $150 million DOT Transit Maintenance Facility in Boulder, Colorado. The largest institutional projects comprised the $348 million Island Parkway Life Sciences Campus in Belmont, California and the $304 million New York Presbyterian Cancer Center in New York, New York.
The DMI is a monthly measure of the value of nonresidential building projects going into planning, shown to lead construction spending for nonresidential buildings by a full year.
Watch Associate Director of Forecasting Sarah Martin discuss February’s DMI here.
