The Associated Builders and Contractors’ backlog indicator fell to 8.7 months in March, which could dampen the confidence of many contractors looking at future projects. The backlog is at the lowest level it’s been since August of 2022 and 0.4 months higher compared to March of 2022, according to ABC’s Construction Backlog Indicator.
Backlog, or the amount of work measured in dollars that construction companies are contracted to do in the time ahead, is down each month in every region except the South, ABC officials said. Construction activity is high in the U.S.’s southern region and ABC officials predict it will stay that way in the future, officials added.
The slip may be a sign of slowdown in nonresidential construction as recession fears and credit restrictions close in, ABC Chief Economist Anirban Basu said.
“The deceleration in nonresidential construction activity may have started. With widespread fears of recession, credit conditions tightening and more decision-makers turning their attention to cost containment, new construction work may be more difficult for contractors to line up,” Basu said in a statement.
Basu said while confidence waned in March, the backlog data might show slowing of activity rather than a shift backward.
“While the confidence and backlog data weakened in March, they indicate a slowing of activity rather than a shift into reverse. There is a widely held view that financial conditions are tightening in the aftermath of the failures of Silicon Valley Bank and Signature Bank. To the extent that this is true, one could anticipate further slowing and less industry confidence during the months ahead,” Basu added.