According to Associated Builders and Contractors (ABC), the Construction Backlog Indicator (CBI) for the fourth quarter of 2014 declined 0.1 months, or 1%. Despite the quarter-over-quarter decline, backlog ended the year at 8.7 months, which is still 4.4% higher than one year ago.
"Inconsistent growth in the volume of public work continues to suppress the pace of nonresidential construction; however, private construction momentum continues to build," said ABC Chief Economist Anirban Basu. "With hotel occupancy rising, office vacancy falling and demand for data climbing exponentially, a number of key private segments are positioned for rapid growth in construction spending this year.
"There are a number of factors that are likely to be beneficial to nonresidential contractors in 2015," said Basu. "First, although interest rates were expected to rise after the Federal Reserve ended its third round of quantitative easing, they have actually been trending lower—due to factors such as falling interest rates abroad and a strengthening U.S. dollar—which helps contractors with construction volume and borrowing costs. Second, materials prices have continued to fall—particularly inputs related to the price of oil, iron ore and copper. This also makes it more likely that construction projects will move forward and helps boost profit margins."
Regional Highlights
• Average backlog in the South is back above 9 months for the first time since the first quarter of 2014.
• Though backlog in the West fell sharply during 2014's final quarter, average backlog remains comparable to where it was a year ago.
• Both the Northeast and the Middle States registered levels of average backlog unseen during the history of the CBI survey.
Industry Highlights
• Average backlog in the commercial and institutional category is virtually unchanged over the past year, suggesting the pace of recovery will remain moderate overall.
• Infrastructure-related spending is likely to be brisk going forward primarily due to improved state and local government fiscal conditions.
• Heavy industrial average backlog remains in the vicinity of multi-year highs, but these readings do not fully reflect the impact of a stronger U.S. dollar, which may result in a slowdown in export growth and an associated softening in industrial investment.
Highlights by Company Size
• During the fourth quarter, backlog expanded for mid-sized companies with annual revenue ranging between $30 million-$100 million. These firms enjoyed approximately half a month expansion in their respective average backlogs during the fourth quarter.
• On the other hand, backlog for small firms (annual revenue less than $30 million) and very large firms (annual revenue greater than $100 million) declined 0.2 months and 0.5 months, respectively.
• Large firms appear to have been impacted by a slowdown in large project infrastructure spending in certain parts of the country, while smaller firms have been impacted by greater observed difficulty in obtaining bonding for projects in the context of accelerating small firm failure.
• Average backlog has increased by nearly three months or by more than three months for all firm size categories since the fourth quarter of 2009.
Related Stories
Codes and Standards | Jul 16, 2015
Berkeley, Calif., adopts balcony inspection program following deadly collapse
Apartment building balconies will be subject to inspections every three years under new regulations adopted following a deadly collapse.
Codes and Standards | Jul 16, 2015
Oregon to spend $300 million for seismic updates on public buildings
A survey found that more than 1,000 Oregon school buildings face a high risk of collapse during earthquakes.
Cultural Facilities | Jul 16, 2015
Louisville group plans to build world's largest disco ball
The sphere would more than double the size of the current record holder.
Industrial Facilities | Jul 14, 2015
Tesla may seek to double size of Gigafactory in Nevada
Tesla Motors purchased an additional 1,200 acres next to the Gigafactory and is looking to buy an additional 350 acres.
BIM and Information Technology | Jul 14, 2015
Nation’s first 'drone park' breaks ground in North Dakota
This is one of six testing sites around the country that are developing flight standards and evaluating the utility of drones for different tasks.
Sponsored | Building Team | Jul 10, 2015
Are you the wrong type of ‘engaged’ leader?
Much of what’s written about employee engagement focuses on how leaders can help their employees become more involved at work. But what about the leaders themselves?
Contractors | Jul 9, 2015
Opioid abuse blamed for increase in worker injuries, business losses
Insurance giant CNA says concerns are increasing in the construction industry.
Architects | Jul 7, 2015
Why AEC firms should be cultivating 'visible experts'
A new study pinpoints the true dollar value of having knowledge leaders and market shapers on your team.
Green | Jul 7, 2015
Philips sheds new light on growing fresh food indoors
A research center in The Netherlands is testing the latest techniques in urban farming.
Healthcare Facilities | Jul 6, 2015
The main noisemakers in healthcare facilities: behavior and technology
Over the past few decades, numerous research studies have concluded that noise in hospitals can have a deleterious effect on patient care and recovery.