Staff Report
Published Sept. 23, 2009
Associated Builders and Contractors is reporting that the nation’s Construction Backlog Indicator for July rose 8.9% to 6.1 months from 5.6 months in June. The CBI is a gauge of the amount of construction work to be completed, measured in time, currently under contract.
“While the magnitude of the monthly increase was significant and impressive, June was the lowest point for the CBI since ABC began collecting national data in November 2008,” said Anirban Basu, ABC chief economist. “At that time, the CBI stood at 7.1 months, or 14% above its current level of 6.1 months.
“The July data strongly reflect the effects of the stimulus package signed into law in February on the commercial, institutional, industrial and infrastructure construction segments,” Basu added. “In the months ahead, we expect higher levels of actual construction spending, a welcome sign for the industry and the economy at large, and an indication that the downturn may be over for the nonresidential construction industry, though not all segments.”
In the South, backlog has declined steadily, falling 17.2 percent from 8.7 months in November 2008 to 6.2 months in July 2009.
“The most severe retrenchment in contracting activity since the nonresidential construction downturn began last year has been within the financial services on the East Coast and the economically weak South,” Basu said. “Presently, the South is disproportionately represented among the states with the highest unemployment rates, including Florida, Georgia, South Carolina, North Carolina and Mississippi. This is consistent with falling demand for construction services, and this is the region that has experienced the sharpest decline in backlog since November 2008.”
Compared to June, the average backlog in July rose in the Northeast, Middle states and the West. However, the Northeast has the shortest backlog at 5.5 months.
The longest backlog is in the West, where backlog rose 1.4% from 7.1 months in June to 7.2 months in July. Contractors in the Middle states collectively report a backlog of 5.6 months for July, up 21.7% from 4.6 months in June.
All three industry segments -- commercial/institutional, heavy industrial and infrastructure -- reported an increase in backlog in July relative to June. However, among the three industry groups, only infrastructure has experienced an increase in average backlog since November 2008.
The infrastructure category backlog declined slightly in July compared to June, but still stands at 9.5 months, the best showing of any industry category.
CBI for both the commercial/institutional and heavy industrial segments remains below six months.
“According to the CBI, the stimulus package passed in February has had the most direct impact on infrastructure construction,” Basu said. “Consequently, this is the nonresidential construction segment that has experienced the most improvement in backlog since February. Backlog in the other two segments has been flat to declining since that time.”
Associated Builders and Contractors is a national association with 79 chapters representing 25,000 merit shop construction and construction-related firms with two million employees.
