The South posted the highest backlog in the history of the Construction Backlog Indicator (CBI) in the fourth quarter of 2015, according to Associated Builders and Contractors (ABC).
Nationally, backlog expanded by 2.7% to 8.7 months in the last three months of the year, with the South expanding on its previous record high reading by 8.7% to 11.19 months. In addition, infrastructure-related backlog expanded by 23.2% in the fourth quarter to 12.2 months.
"For the first time in years, some contractors are reporting that they are turning away work," ABC Chief Economist Anirban Basu said. "Skill-worker shortages are a frequently cited reason. The recent uptick in backlog suggests that demand for construction workers will remain elevated going forward, which will translate into faster wage growth, but also potentially rising costs and extended timelines.
"The nonresidential construction recovery remains very much in place," Basu said. "Despite disappointing news regarding global growth and corporate earnings, most contractors reported steady to rising backlog during 2015's final weeks. That's important to contractors, of course, but also to other economic stakeholders, since nonresidential construction spending growth has emerged as one of the nation's leading economic drivers.
"Nonresidential construction spending growth in January of 2016 was fully 12.3% its year-ago level," Basu said. "However, there were a number of months during the latter half of 2015 during which construction spending growth was soft. Accordingly, backlog expanded less rapidly during that period, including during the quarters that precede the fourth quarter's expansion."
For additional analysis click here.
Regional Highlights
- After a lull in backlog growth in Louisiana, several Louisiana contractors are reporting significant surges in backlog more recently. Louisiana is one of the nation's leading oil and natural gas suppliers. Some analysts have indicated that the state has been at risk of recession. But the ongoing expansion of the petrochemical sector as helped to rebuild backlog. Commercial activity has also begun to rebound in many communities.
- Backlog remains steady in the Northeast. The region has benefitted from stabilized federal government outlays, improving fiscal conditions in a handful of states and brisk commercial activity that is often linked to multifamily construction.
- Backlog in the West slipped during the year's initial quarter. There has been much speculation regarding excessively high technology company valuations. Many tech companies have expanded their physical capacity in recent years, and evidence suggests that this pace of expansion may have slowed somewhat. Still, backlog in the West remains above its level in the first half of 2015.
See Charts and Graphs.
Industry Highlights
- Backlog in the infrastructure category has reached an all-time high of 12.2 months. During the fourth quarter, backlog in this category increased by 2.3 months, a remarkable result and indicative of the quick impact of the newly passed federal highway spending bill – the first such bill to be passed in many years.
- Backlog in the heavy industrial category stands at 6.64 months, 6% lower than during the third quarter of 2015. This comes as little surprise as the nation's manufacturing sector sustained a 6% dip in exports last year. Additionally, the strong U.S. dollar has rendered imports more price competitive, suppressing domestic profit margins and construction.
- Backlog in the commercial/institutional category stands at more than 8 months. Backlog in this segment has stood at 8 months or better for 14 consecutive months, a reflection of the ongoing gradual economic recovery.
See Charts and Graphs.
Highlights by Company Size
- Backlog in the $30 million to $50 million annual revenue category now exceeds 12 months, the highest level in the history of this series. By contrast, average backlog during the fourth quarter of 2009 (six years ago) stood at 5.5 months.
- Backlog among the largest construction firms in the survey (+$100 million) expanded to 11.8 months during 2015's final quarter, the second highest level in the history of the series.
- Backlog in the $50 million to $100 million annual revenue category remains above 10 months and has been above that threshold during 12 of the last 14 quarters.
- Backlog among the smallest firms in the survey (>$30million) stood at 7.2 months during the four quarter, roughly the same as during the prior quarter. Backlog among this group of firms hardly changed over the course of 2015, though backlog presently is not as elevated on average as it was during in mid-2014.
See Charts and Graphs.
Related Stories
| Jul 29, 2016
AIRPORT FACILITIES GIANTS: Airports binge on construction during busy year for travel
Terminal construction will grow by nearly $1 billion this year, and it will keep increasing. Airports are expanding and modernizing their facilities to keep passengers moving.
| Jul 29, 2016
Top 45 Airport Terminal Construction and CM Firms
Hensel Phelps generated more than $660 million in revenue last year to earn the top spot on BD+C’s annual ranking of the nation’s largest airport terminal construction and CM firms.
| Jul 27, 2016
Turner turns to design-build, P3, Lean practices, and engineering services
Design-build has accounted for a notable portion of Turner’s work over the last few years.
| Jul 27, 2016
CONSTRUCTION GIANTS: Economists forecast moderation for nonresidential projects
Construction spending is up this year and is expected to continue to increase through 2017. But, economists identified factors that could slow construction spending.
| Jul 27, 2016
Top 70 Construction Management Firms
Hill International, Jacobs, and JLL head Building Design+Construction's 2016 ranking of the largest construction management and project management firms in the United States.
| Jul 27, 2016
Top 115 Contractor Firms
Turner Construction, Whiting-Turner Contracting, Fluor, and Skanska top Building Design+Construction's 2016 ranking of the largest contractors in the United States.
Sports and Recreational Facilities | Jul 20, 2016
San Diego’s waterfront redevelopment would go beyond a mere ‘project’
Its developers envision a thriving business, education, and entertainment district, highlighted by a huge observation tower and aquarium.
| Jul 19, 2016
2016 GIANTS 300 REPORT: Ranking the nation's largest architecture, engineering, and construction firms
Now in its 40th year, BD+C’s annual Giants 300 report ranks AEC firms by discipline and across more than 20 building sectors and specialty services.
Sports and Recreational Facilities | Jul 18, 2016
Turner and AECOM will build the Los Angeles Rams’ new multi-billion dollar stadium project
The 70,000-seat stadium will be ready by the 2019 NFL season. The surrounding mixed-use development includes space for retail, hotels, and public parks.
Contractors | Jul 15, 2016
Trade unions, contractors call for maximum penalty in construction worker death case
‘Sick and tired’ of lawbreaking contractors defining public perception.