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
| Jan 5, 2015
Beyond training: How locker rooms are becoming more like living rooms
Despite having common elements—lockers for personal gear and high-quality sound systems—the real challenge when designing locker rooms is creating a space that reflects the attitude of the team, writes SRG Partnership's Aaron Pleskac.
| Jan 2, 2015
Construction put in place enjoyed healthy gains in 2014
Construction consultant FMI foresees—with some caveats—continuing growth in the office, lodging, and manufacturing sectors. But funding uncertainties raise red flags in education and healthcare.
| Dec 30, 2014
A simplified arena concept for NBA’s Warriors creates interest
The Golden State Warriors, currently the team with the best record in the National Basketball Association, looks like it could finally get a new arena.
| Dec 30, 2014
The future of healthcare facilities: new products, changing delivery models, and strategic relationships
Healthcare continues to shift toward Madison Avenue and Silicon Valley as it revamps business practices to focus on consumerism and efficiency, writes CBRE Healthcare's Patrick Duke.
| Dec 29, 2014
High-strength aluminum footbridge designed to withstand deep-ocean movement, high wind speeds [BD+C's 2014 Great Solutions Report]
The metal’s flexibility makes the difference in an oil rig footbridge connecting platforms in the West Philippine Sea. The design solution was named a 2014 Great Solution by the editors of Building Design+Construction.
| Dec 29, 2014
HDR and Hill International to turn three floors of a jail into a modern, secure healthcare center [BD+C's 2014 Great Solutions Report]
By bringing healthcare services in house, Dallas County Jail will greatly minimize the security risk and added cost of transferring ill or injured prisoners to a nearby hospital. The project was named a 2014 Great Solution by the editors of Building Design+Construction.
| Dec 29, 2014
New mobile unit takes the worry out of equipment sterilization during healthcare construction [BD+C's 2014 Great Solutions Report]
Infection control, a constant worry for hospital administrators and clinical staffs, is heightened when the hospital is undergoing a major construction project. Mobile Sterilization Solutions, a mobile sterile-processing department, is designed to simplify the task. The technology was named a 2014 Great Solution by the editors of Building Design+Construction.
| Dec 29, 2014
Startup Solarbox London turns phone booths into quick-charge stations [BD+C's 2014 Great Solutions Report]
About 8,000 of London’s famous red telephone boxes sit unused in warehouses, orphans of the digital age. Two entrepreneurs plan to convert them into charging stations for mobile devices. Their invention was named a 2014 Great Solution by the editors of Building Design+Construction.
| Dec 29, 2014
Spherical reflectors help spread daylight throughout a college library in Portland, Ore. [BD+C's 2014 Great Solutions Report]
The 40,000-sf library is equipped with four “cones of light,” spherical reflectors made from extruded aluminum that distribute daylight from the library’s third floor to illuminate the second. The innovation was named a 2014 Great Solution by the editors of Building Design+Construction.
| Dec 29, 2014
Hard hat equipped with smartglass technology could enhance job site management [BD+C's 2014 Great Solutions Report]
Smart Helmet is equipped with an array of cameras that provides 360-degree vision through its glass visor, even in low light. It was named a 2014 Great Solution by the editors of Building Design+Construction.