Construction Backlog Indicator Expands to 7 Months

Washington, D.C.-based Associated Builders and Contractors (ABC) recently reported that its latest Construction Backlog Indicator (CBI) increased to 7 months in May — a 27% increase from January of this year. CBI is a forward-looking indicator that measures the amount of construction work under contract to be completed in the future.

"Construction backlog continues to edge higher and has generally been on an upward trajectory since late-2009," says ABC Chief Economist Anirban Basu. "But it's not clear whether this level can be sustained. While this latest data indicate a broader improvement in non-residential construction activity, there may be several alarming reasons for the increase including the financial failure of competitor firms leaving more opportunities for surviving companies, or contractors accepting projects with lower profit margins."

Backlog in the infrastructure category remains relatively high and there was improvement over the past two months in the commercial/institutional and heavy industrial categories, as well," continues Basu. "However, whether the non-residential construction rebound will continue to strengthen and broaden for the remainder of 2010 remains to be seen."

Regional highlights include:

• Compared to a year ago, all regions but the South experienced a rise in backlog.
• As of May 2010, the Northeast reports the lengthiest backlog at roughly 7.5 months, the highest level for this region in the history of the survey.
• The Middle States report the shortest backlog at roughly 6.6 months. However, that represents a significant improvement over the 5.6 months in May 2009.