ABC’s Construction Confidence Index reading for sales and staffing levels moved lower in May while the reading for profit margins increased. All three readings remain above the threshold of 50, indicating expectations of growth over the next six months.

“During a period of ongoing tumult associated with major bank failures, a near-miss debt ceiling crisis, and shifting monetary policy, nonresidential construction backlog has remained remarkably stable,” said ABC Chief Economist Anirban Basu. “At nearly nine months, backlog is essentially unchanged from a year ago and the previous month.

“Moreover, contractor confidence remains elevated despite massive increases in cost of capital and growing concerns over the nation’s commercial real estate segment, with firms indicating sufficient demand and associated pricing power that will keep profit margins steady or better.”

Lower construction input prices are also helping contractors. According to an ABC analysis of the U.S. Bureau of Labor Statistics’ Producer Price Index data, prices fell 0.6% month-over-month. Nonresidential construction input prices declined 0.5% for the month.

This continues a downward trend after inflation drove prices up last year. Overall construction input prices are 3.7% lower than a year ago. Nonresidential construction input prices are 3.4% lower.

There’s reason to believe new jobs will continue to come online.

The AIA/Deltek Architecture Billings Index (ABI) score for May was 51, the highest it has been since last September. In addition, inquiries into new projects and the value of new design contracts also bounced back during the month, with inquiries reaching their highest level in nine months, and design contracts increasing for the first time since February.

Despite growth in the overall ABI this month, business conditions remain variable in different regions of the country. Billings improved at firms located in the South for the second consecutive month in May, while they were essentially flat at firms located in the Midwest, following six months of growth. However, billings continued to decline at firms located in both the West and Northeast, where scores have been below 50 since last fall.

By firm specialization, business conditions softened further at firms with a multifamily residential specialization in May, falling to the lowest level in two years. Billings also declined for the ninth consecutive month at firms with a commercial/industrial specialization. On the other hand, business conditions improved for the second month in a row at firms with an institutional specialization, as they reported their strongest growth since last year.