Infrastructure Nudges Backlog Higher as Other Sectors Struggle
Date Posted: December 19, 2023
Posted In: Discussion, News,
From Construction Dive: Backlog inched up in November to 8.5 months due to an uptick in infrastructure projects, according to a Tuesday release from Associated Builders and Contractors, but other sectors continue to struggle.
The group’s Construction Backlog Indicator moved up 0.1 month in November, marking the first positive shift following three months of decline. The measure still trails last November’s level of 9.2 months, however, and remains 0.8 months lower than July’s cyclical peak, according to ABC, as high interest rates stymie private development.
Large contractors, or firms with more than $100 million in revenue, shed the most backlog in November, losing about 2.8 months worth of work, according to an ABC member survey conducted Nov. 20 to Dec. 4. On the other hand, firms with under $30 million in sales clawed back about 0.5 months of backlog in November, though that amount is still lower than a year ago.
Dive Insight:
Infrastructure projects posted the only gain in backlog in November, adding about a month’s worth of work. For contractors outside of the infrastructure scope, though, backlogs have taken more of a hit.
“A growing number of contractors are reporting declines in backlog,” said Anirban Basu, ABC chief economist. “The interest rate hikes implemented by the Federal Reserve appear to be making more of a mark on the economy. Not only has the cost of capital risen over the past 20 months, but credit conditions are also tightening, rendering project financing even more challenging.”