The construction sector persists in resisting the opposing forces of stricter credit circumstances, as reported by the Associated Builders and Contractors (ABC). Although there’s a dip in backlog, ABC’s Construction Confidence Index showed a rise in the sales and staffing levels in September, albeit with a minor decline in the profit margins reading. Each of these readings still stands above the 50 mark, signaling optimistic projections for expansion in the upcoming half-year.
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“Construction continues to defy the downward gravitational pull of tightening credit conditions,” said ABC Chief Economist Anirban Basu. “Despite high project financing costs, ABC contractor members continue to report lofty backlog, rising employment, expanding sales, and stable profit margins.”
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However, industry headwinds are growing, Basu said, calling out political dysfunction on Capitol Hill, rising labor costs, lingering supply chain issues, and the rising cost of financing. The U.S. economy appears ready to slow further, he said.
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“If the past is any indication, that will eventually catch up to construction in the form of dissipating demand,” he said in the release. “But economists have talked about recession for more than a year, and the industry still shows substantial forward momentum. Whether that momentum can survive the latest challenges remains to be seen.”
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Outlook:

While the decline in backlog is a concern, it is essential to note that all three readings of ABC’s Construction Confidence Index remain above the threshold of 50, indicating expectations for growth over the next six months. This suggests that the construction industry is still relatively strong despite the headwinds it is facing.
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Family-owned builders, remodelers, and trade companies are particularly well-positioned to weather the current challenges. They are typically more flexible and agile than larger companies and are often more closely connected to their communities. Additionally, they can often offer more personalized services and attention to detail.
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As a result, small business builders, remodelers, and trade companies will likely remain in demand in the coming months and years. They can position themselves for success by focusing on their strengths, such as flexibility, agility, and customer service.
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Call to Action:

If you are a family-owned builder, remodeler, or trade company, there are a few things you can do to position yourself for success in the coming months and years:
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  • Focus on your strengths. What makes your company unique and different from the competition? Highlight those strengths in your marketing and sales materials.
  • Be flexible and agile. Things can change quickly in the construction industry, so adapting to new challenges and opportunities is essential.
  • Focus on customer service. Provide your customers with a personalized experience and build strong relationships with them. This will help you to weather any storms that come your way.