Construction backlog at standstill

In a national survey of its members, the Associated Builders and Contractors (ABC) has reported that its latest Construction Backlog Indicator (CBI) remained virtually unchanged since June, where it stood at seven months. CBI is a forward-looking indicator that measures the amount of non-residential construction work under contract to be completed in the future.

“Construction backlog is no longer expanding despite the fact that backlog related to infrastructure continues to increase," said ABC chief economist Anirban Basu. “This suggests that the recovery of privately financed activities remains slow. There are no indications, however, that overall construction business volume has begun to shrink; merely that [the] backlog is no longer advancing.”

Nonresidential construction activities typically lag the overall economy by 12 to 24 months, according to Basu, with the implication that privately financed activities should soon begin to show signs of a rebound.

The northeastern United States has enjoyed a strong rebound in non-residential construction activity for a variety of reasons, according to the ABC, including healthier investment banks, increased federal government spending on military bases and expansion in the technology sector. In contrast, the West continues to suffer disproportionately due to ongoing softness in economic activity in Arizona, California, Nevada and New Mexico.

“Construction backlog is roughly flat in sectors of the economy that heavily depend on private financing and remains elevated for segments that depend on public financing. This is cause for concern because publicly financed construction spending is set to decline sometime in 2011, and beyond,” Basu said.

Headquartered in Washington, D.C., ABC is a national association with 77 chapters representing 25,000 merit shop construction and construction-related firms with 2 million employees.