After A Brief Uptick, Commercial Construction Backlog Falls Again

After A Brief Uptick, Commercial Construction Backlog Falls Again

Tyler Durden

Fri, 10/16/2020 – 12:42

By Jenn Goodman of Construction Dive,

Summary:

  • Associated Builders and Contractors reported Tuesday that its Construction Backlog Indicator fell to 7.5 months in September, a decline of 0.5 months from August’s reading and 1.5 months lower than last year at this time. In addition, the association’s Construction Confidence Index readings for sales and profit margins also decreased.

  • The September numbers trend downward in light of the fact that the numbers for backlog, sales, profit margins and staffing expectations all increased in August

  • “ABC’s survey data indicate that we are in the early stages of a nonresidential construction spending downturn,” said ABC Chief Economist Anirban Basu. “With few exceptions, declines in backlog have begun to accelerate across all markets and regions.”

<!–[if IE 9]><![endif]–>

    In terms of sectors, backlog declined the most in the infrastructure category, yet was higher in the heavy industrial category, a segment that is coming back to due to a combination of an inventory rebuilding cycle, surging e-commerce demand and reshoring of production back to the United States, Basu said.

    <!–[if IE 9]><![endif]–>

    Regionally, the declines have been most pronounced in the West, which is largely a reflection of the many challenges facing California’s economy, Basu said.

    In addition, more than a third of contractors expect their sales to decline, a dramatic increase from the less than 17% recorded at the same time last year, Basu noted, and more than three-fourths of contractors expect profit margins to be flat or worse over the next six months.

    <!–[if IE 9]><![endif]–>

    This negative sentiment is a reflection of the challenges facing contractors right now, he said. These include:

    • Fewer bidding opportunities.

    • More vigorous competition for work.

    • Rising materials costs.

    • Tighter lending standards.

    • Weakened commercial real estate fundamentals.

    • Diminished state and local government financial health.

    • Persistent difficulty in identifying and hiring sufficiently skilled and motivated workers. 

    Despite ongoing economic uncertainty as the pandemic lingers and winter approaches, staffing levels are expected to grow over the next six months as contractors strive to hold onto their workforce and potentially add to their pool of talent, the economist said.

    The ABC findings are in line with recent declines in billings for architectural professionals. The latest AIA Billings Index showed that architecture work is stalled at 40 indicating a decline in firm billings. The score has been unchanged for months, meaning that the share of firms reporting increasing billings has not risen during that time. 

    The AIA data indicates that business conditions are the most soft at firms in the Northeast, the region that was hardest hit by the pandemic and subsequent recession. Billings continued to decline at firms in the rest of the country as well, but the pace of that decline has slowed from the low point in the spring, according to AIA.


    This post has been republished with permission from a publicly-available RSS feed found on Zero Hedge. The views expressed by the original author(s) do not necessarily reflect the opinions or views of The Libertarian Hub, its owners or administrators. Any images included in the original article belong to and are the sole responsibility of the original author/website. The Libertarian Hub makes no claims of ownership of any imported photos/images and shall not be held liable for any unintended copyright infringement. Submit a DCMA takedown request.

    -> Click Here to Read the Original Article <-

    About The Author

    Tyler Durden

    Zero Hedge's mission is to widen the scope of financial, economic and political information available to the professional investing public, to skeptically examine and, where necessary, attack the flaccid institution that financial journalism has become, to liberate oppressed knowledge, to provide analysis uninhibited by political constraint and to facilitate information's unending quest for freedom. Visit https://www.zerohedge.com

    Leave a reply

    Your email address will not be published. Required fields are marked *

    This site uses Akismet to reduce spam. Learn how your comment data is processed.

    Welcome

    Bringing together a variety of news and information from some of today’s most important libertarian thought leaders. All feeds are checked and refreshed every hour and pages auto-refresh every 15 minutes. External images are deleted after 30 days.

    Time since last refresh: 0 second

    Publish Your Own Article

    Follow The Libertarian Hub


    Please consider donating using any of the cryptocurrencies below or use the Brave browser to tip using Basic Attention Tokens (BAT). Your anonymous contributions help keep this website running for everyone to enjoy!

    Donate

    Take Control of Your Domain Names
    The Ultimate Managed Hosting Platform

    Weekly Newsletter

    Newsletter Signup

    Subscribe to our newsletter to receive a weekly email report of the top five most popular articles on the Libertarian Hub!

    Weekly Newsletter SignupTop 5 Stories of the Week

    Subscribe to our newsletter to receive a weekly email report of the top five most popular articles on the Libertarian Hub!