Construction backlog was down 18 percent in November 2009 compared to November 2008, according to ABC’s Jan. 20 Construction Backlog Indicator (CBI).
“You can summarize three important points from the recent CBI data – the worst is over for the construction industry as a whole; the recovery may not be a sustained one; and the United States is rebuilding infrastructure capacity,” said ABC Chief Economist Anirban Basu.
On a yearly basis, the average backlog for all regions ABC monitors remained lower than November 2008. On a monthly basis, average backlog for the South and Middle States grew while the West and Northwest declined – keeping in sync with the broader economic data that indicate the most forceful economic recoveries are taking place in commodity-intensive states such as Nebraska, South Dakota, Louisiana and Mississippi. The South has the longest backlog at 6.5 months while the Middle states have the shortest at 4.9 months.
“There is ample evidence that the worst period of decline for nonresidential construction across the United States is now behind us,” said Basu. “Though backlog remains well below levels from November 2008, backlog has bounced back from its cyclical low in each region of the nation. While this trend is encouraging, we cannot assume ongoing improvement will be sustained. Once stimulus monies begin to run out, backlog could begin to trend lower again.”
Of the three industry segments ABC monitors, the heavy industrial category saw the biggest rebound, reaching 7.53 months and the commercial and institutional category was the only segment that sustained a decline in backlog compared to last year. Infrastructure backlog rose to almost 11 months after a weak showing in the previous CBI.
“Improving confidence in the domestic and global economies, expanding exports, and rising inventory investment, as well as some thawing in credit markets, are likely responsible for the CBI’s increase,” said Basu. “America is rebuilding its capacity. Though the commercial and institutional category remains weak due to still sluggish labor markets, rising office vacancy rates and declining hotel occupancy rates, renewed investment in the heavy industrial and infrastructure categories indicates a brighter future for this sector.”
Companies in all size categories except those in the $50 to $75 million category saw backlogs lower than a year ago. Larger companies, which are often the most closely aligned to heavy industrial and infrastructure-related construction, continue to enjoy the longest average backlog at 8.5 months.
To view the complete CBI report including charts, graphs and methodology, click
here.