The nation’s Construction Backlog Indicator (CBI) reached 6.1 months in July up from 5.6 months in June, according to a report released Sept. 22 by ABC. Despite the large monthly increase, backlog is still 14 percent lower than the 7.1 months posted in November 2008, when ABC began collecting national data.
“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,” said ABC Chief Economist Anirban Basu. “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.”
Average backlog in three of the four regions ABC monitors rose in July compared to June, with the Northeast reporting the shortest backlog of 5.5 months and the West reporting the longest at 7.2 months. The South has seen a steady decline since November 2008, falling 17.2 percent to 6.2 months.
“Presently, the South is disproportionately represented among the states with the highest unemployment rates, including Florida, Georgia, South Carolina, North Carolina and Mississippi,” Basu noted. “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.”
All three industry segments, commercial/institutional, heavy industrial and infrastructure, reported an increase in backlog in July compared to June. However, only infrastructure has seen an increase in average backlog since November 2008 and the CBI for the commercial/institutional and heavy industrial segments remains below 6 months.
Smaller firms fared better than larger firms on a monthly basis, with companies bringing in less than $30 million in revenue collectively averaging a backlog of 5.7 months in July compared to 4.7 in June. Companies with annual revenues between $30 million and $50 million saw a smaller rise in July reaching 4.7 months compared to 4.2 in June. However, companies with annual revenues exceeding $100 million fell from 7.5 months of backlog in June to 7.3 in July. Companies with annual revenues between $50 million and $75 million were the only segment to see an increase compared to November 2008.
“In July, the pre-existing trend shifted as smaller firms appeared to pick up a bit of momentum,” said Basu. “This may be because these firms have been the most eager to line up new work in recent months and aggressive marketing and bidding among this group appears to be reflected in the backlog data. That said, larger firms generally continue to command a longer and more stable average backlog.”
To learn more about CBI, read the full report or view the charts and graphs, visit
www.abc.org/backlog.