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ABC: Construction Backlog Up In Every Category

National average at highest point in 7 years

June 22, 2017

The backlog of work that building companies have under contract increased in the first quarter of the year, showing that demand for construction services remains strong.

Associated Builders and Contractors (ABC)  reports that its Construction Backlog Indicator (CBI) rose to 9 months during the first quarter of 2017, up 8.1 percent from the fourth quarter of 2016. CBI is up by 0.4 months, or 4 percent, on a year-over-year basis.

“This was a terrific report,” said ABC Chief Economist Anirban Basu. “For the first time in the series’ history, every category—firm size, industry and region—registered quarterly growth in CBI."

Highlights

  • West - Backlog was up 26 percent during the quarter, a reflection of the rapid commercial growth in Seattle, Denver, Silicon Valley, San Diego, Phoenix and other population growth hotspots.
  • Northeast -  Backlog rose to 8.7 months during the first quarter, up by almost precisely half a month over the past year. The New York and Boston metropolitan areas remain particularly active. 
  • South  - Backlog is slightly the lengthiest backlog, at 9.8 months. Distribution center construction continues to be active due to a combination of busier seaports and the ongoing online retail boom. Commercial construction is very active in Atlanta and Miami and Tampa, Fla.
  • Middle States - Backlog expanded by 10 percent during the first quarter to 8.5 months.  Chicago continues to be a weak spot, however.
  • National - Commercial and industrial companies had 8.9 months of backlog in the first quarter, heavy-industrial companies had 5.88 months and infrastructure companies had 11.03 months.

“However, some contractors have expressed concerns regarding construction conditions in 2019 or 2020,” said Basu. “These concerns are rooted in a number of factors, including the already lengthy duration of the economic recovery, evidence of saturation in certain commercial real estate markets, weak momentum in numerous public spending categories and tightening monetary conditions. However, first quarter 2017 CBI strongly suggests that rumors of the business cycle’s demise are exaggerated, at least thus far. 

“Because of these and other emerging concerns, ABC’s CBI measure is arguably more important than usual,” said Basu. “Backlog is a leading indicator, and meaningful declines in CBI could potentially confirm fears that the current construction spending expansion cycle is winding to a close.”

CBI is a leading economic indicator that reflects the amount of construction work under contract, but not yet completed. CBI is measured in months, with a lengthening backlog implying expanding demand for construction services. More charts and graphs are available on abc.org.

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