Crane Hot Line is part of the Catalyst Communications Network publication family.
By Seth Skydel
Crane projects require planning. Long in advance of machines arriving at job sites, operators and rental companies have to consider equipment and crew needs. Before that even happens, having insights into construction spending can be invaluable for determining what business opportunities might be coming.
A key source for construction spending projections is the Associated Builders and Contractors, a national construction industry trade association representing more than 23,000 members. On a regular basis, ABC produces its Construction Backlog Indicator, which reflects the amount of work that will be performed by commercial and industrial construction contractors in the months ahead.
Covering data from a member survey that ran into early February of this year, the ABC Construction Backlog Indicator show a declined to 8.4 months in January. That reading is also down 0.6 months from January 2023, indicating that construction activity is rising. Overall, the backlog is down on a year-over-year basis in the commercial/institutional and infrastructure categories.
ABC’s Construction Confidence Index readings for sales and staffing levels increased in January, another indicator of rising activity. The latest reading for profit margins declined, possibly a reflection of higher costs. However, all three readings remain above the threshold of 50, indicating expectations for growth over the next six months.
“As predicted, performance in the nonresidential construction sector is becoming more disparate across segments,” said ABC Chief Economist Anirban Basu. “For much of the pandemic recovery period, contractors in virtually all segments were indicating stable to rising backlog. That remains the case for contractors most exposed to the nation’s industrial production. Reshoring and near-shoring continue to drive construction spending.
“In other categories, however, including those most interest rate-sensitive, activity appears to be slowing,” said Basu. “Developer financing has become both more expensive and more difficult to obtain over roughly the past year, in part because of rising office vacancy in many markets. That helps to explain declining backlog in the commercial category. The decline in infrastructure-related backlog may be due only to seasonality, however. There is every reason to believe that contractors specializing in public works will have a very busy year.”
Further bolstering growth expectations is the February 2024 Monthly Confidence Index for the Equipment Finance Industry from the Equipment Leasing & Finance Foundation. The index reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives from the equipment finance sector. Overall, confidence in the equipment finance market is 51.7, an increase from the January index of 48.6.
In the survey, 17.9% of respondents believe that U.S. economic conditions will get “better” over the next six months, up from 13.8% in January. 67.9% indicate they believe the U.S. economy will “stay the same” over the next six months, an increase from 65.5% last month. 14.3% believe economic conditions in the U.S. will worsen over the next six months, a decrease from 20.7% the previous month.
Seth Skydel is a writer with 38 years of experience covering the trucking, utility, construction, and related markets.
