TWIA Commercial Property & Casualty
Construction backlog slips as contractors lose confidence
Sep
Dive Brief:
- Backlog decreased to 8.2 months in August largely due to the rising cost of financing and project expenses, according to a Sept. 10 release from Associated Builders and Contractors.
- Only the infrastructure category posted a backlog increase in August, an indicator of ongoing public construction spending strength, according to the report. Meanwhile, the commercial and institutional sectors, which are more sensitive to financing conditions, dropped over the past month. All three categories are now lower than a year ago.
- “As predicted, confidence among contractors is slipping,” said Anirban Basu, ABC chief economist. “While ABC contractor members are still anticipating expanding sales and employment, profit margins are increasingly under pressure as project owners face high borrowing and construction delivery costs in the context of a slowing economy.”
Dive Insight:
Despite the relative strength of infrastructure projects, backlog still declined across all major segments over the past year.
Total work in the pipeline now trails last year’s pace by exactly one month. That has led to growing pessimism among contractors, according to the report.
For example, ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels all fell in August. Notably, its readings for profit margins also dipped below the threshold of 50, meaning contractors no longer expect profit margin growth over the next six months.
That squeeze on profits could lead to even more postponements, especially in the South, said Basu. The South region has lost about 2.3 months worth of work over the past 12 months, the largest decrease for any region nationally.
Drops were across the board, with almost all sizes of construction companies reporting declines to their backlog in August, according to ABC. Only firms with annual revenue between $50 million and $100 million managed to grow their backlog over the past month.
Stay Ahead in Construction: Essential Insights and Protection for Your Projects
The construction industry is the backbone of progress, constantly evolving and presenting new opportunities and challenges. As an investor, realtor, or lender in this vibrant sector, staying informed with the latest construction news is key to making smart decisions. Our blog, sourced from one of the top construction industry sites, is your gateway to staying ahead of the curve.
But what about protecting your investments and projects? Alongside these insights, we present our comprehensive Contractor Insurance Suite, designed to shield your construction projects from the unforeseen. From liability to property damage, our insurance solutions provide the security you need in an industry known for its unpredictability.
Whether you're breaking ground on a new project or managing ongoing developments, our insurance suite ensures that your financial interests are protected immediately. Discover how our tailored insurance products can be the cornerstone of your construction project's success.
Explore Contractor Insurance Solutions for Construction Success
This post was originally published on this site
