Construction industry leaders remained confident in December 2023, according to Associated Builders and Contractors.
All three components of ABC’s Construction Confidence Index increased for the month and remained above the diffusion index threshold of 50.
In December 2023, ABC’s Construction Confidence Index increased from 59.9 to 61.6 for staffing levels; from 57 to 58.9 for sales expectations; and from 51 to 54.2 for profit margin expectations.
Additionally, ABC’s Construction Backlog Indicator increased from 8.5 months in November 2023 to 8.6 months in December 2023, which is down 0.6 months from December 2022.
“Collectively, contractors experienced an uptick in optimism during the holiday season,” said ABC Chief Economist Anirban Basu. “Credit conditions eased a bit during the last days of 2023 as the Federal Reserve indicated that its next set of moves will be to reduce borrowing costs. That may have rendered project financing a bit easier, translating into both improved backlog and more optimism regarding sales, employment and profit margins for the for the first half of 2024.
“Still, there remains cause for concern,” Basu continued. “Recent data indicate that wage pressures persist, which makes it more likely that interest rates, and therefore project financing costs, will remain higher for longer. Geopolitical instability appears to be on the rise, raising the probability of a major conflagration that could further impact supply chains and potentially cause steep increases in certain energy prices.”
